



























































Union Calendar No. 123. 

62 d Congress, ) HOUSE OF REPRESENTATIVES, j Report 
%d Session. j j No. 391. 


PLACING SUGAR ON THE FREE LIST. 


l£L 


March 5, 1912.—Committed to the Committee of the Whole House on the state of 
the Union and ordered to be printed. 


Mr. Underwood, from the Committee on Ways and Means, 
submitted the following 

REPORT. 

[To accompany H. R. 21213.] 


The Committee on Ways and Means, toTwhom was referred the 
bill (H. R. 21213) placing sugar on the free list, having had the 
same under consideration, report it back to the House without 
amendment and recommend that the bill do pass. 

CONDITION OF SUGAR INDUSTRY. 

The manufacture of sugar in the United States has developed very 
rapidly in recent years. Great profits are being made in the in¬ 
dustry and it is now strongly established in this country. The 
industry may be separated into three general divisions: (1) Beet- 
sugar manufacture and the production of sugar beets; (2) the manu¬ 
facture of cane sugar, and cane growing in Louisiana and Texas; and 
(3) the refining of sugar. 

BEET SUGAR. 

The growth of the beet-sugar industry in this country, during the 
decade ended with 1909, is shown in Table 1 to have increased 117 
per cent in number of establishments, 399 per cent in the quantity 
of beets used in the manufacture of sugar, and the value of the products 
has increased almost sevenfold. 








2 


PLACING SUGAR ON THE FREE LIST 


Table 1. — Acreage -planted and production of beets: 1909, 1904, and 1899. 
[Census Bureau, Department of Commerce and Labor.] 



Census— 

Per cent 
of in- 

Item. 

1909 

1904 

1899 

crease, 
1899 to 
1909. 

Number of establishments. 

05 

51 

30 

117 

Acreage planted and beets used: 

Total- 

Acres . 

410,000 

240,800 
2,175,400 
9.0 

135,300 

794,600 

5.9 

207 

Quantity (tons). 

3,905,300 
9.5 

399 

Average quantity per acre (tons). 

61 

Grown directly by factory— 

Acres. . 

29,500 
200,800 

9.0 

20,500 
169,800 
8.3 

10,200 

23,200 

2.3 

189 

Quantity (tons). 

1,050 

Average quantity per acre (tons). 

291 

Grown by tenants of factory— 

Acres...:. 

18,200 
103,800 
9.0 

20,200 
210,300 
10.4 

13,100 

39 

Quantity (tons). 

95', 100 
7.3 

72 

Average quantity per acre (tons). 

23 

Grown on contract by others than tenants of 
factory— 

Acres. 

308,300 
3,534,700 
9.0 

200,100 
1,795.300 
9.0 

112,000 
676,300 

229 

Quantity (tons). 

423 

Average quantity per acre (tons). 

6.0 

60 




Table 2. —Quantity and value of beet products, by States, 1909, 1904, and 1899. 
[Census Bureau, Department of Commerce and Labor.] 







* 

Products. 






6 

'—✓ 

(A 



Sugar. 


Molasses. 

cn 

O 

State. 


•+-> 

a 

g 

3 

G$ 

P 

Granulated. 

Raw. 



All other pro' 
(value). 


Year. 

a) 

3 

c3 

CO 

w 

> 

r 5s 

o 

Eh 

CO 

r-* 

© 

Eh 

Value. 

Tons. 

Value. 

Gallons. 

Value. 

United States... 

1909 

65 

$48,122,000 

496,800 

$45,640.000 

4,900 

$292, 000120 , 812, 800 

$1,129,000 

$1,055,000 


1904 

51 

24,394,000 

248,300 

23,494,000 

5,600 

431.000 

9, 609,500 

221,000 

248,000 


1899 

30 

7,324,000 

57,900 

5,581,000 

23,900 

1,642,000 

11,843.400 

25,000 

76.000 

California. 

1909 

10 

11.981.000 

4,415,000 

126,600 
46.200 

11,717,000 

200 

11,000 

2,135,800 

74.000 

178,000 


1904 

5 

4,268,000 

700 

52,000 

2,759, 500 

52,000 

43,000 


1S99 

7 

3.500,000 

21.900 

2,050,000 

21,500 

1,441.000 

0) 

9,000 

Colorado 2 . 

1909 

16 

13,729,000 

147,000 

68,100 

13,011,000 

1,600 

114.000 

7.669,200 

381,000 

223,000 


1904 

9 

7,199,000 

6,893,000 

2,000 

154,000 

3.941,300 

85,000 

67,000 

Michigan. 

1909 

16 

10,477,000 

103,900 

9,757,000 

600 

41,000 

5,016,700 

337.000 

342,000 

1904 

19 

5,378,000 

60,000 

5,184,000 

2,000 

120,000 

1,081,100 

22,000 

52,000 

Wisconsin 2 . 

1899 

1909 

1904 

9 

4 

3 

1,602,000 

1,366,000 

938,000 

10,569,000 

16,400 
13,000 
8,800 
106,300 

1,561.000 
1,249,000 
902,000 
9,912,000 

500 

39,000 

321,100 
832,400 
4‘‘8. 700 

1,000 
68,000 
19,000 
269.000 

1,000 
50,000 
17,000 

All other States 3 .. 

1909 

19 

2,500 

126,000 

5,158,700 

262,000 


1904 

15 

6,464,000 

65,200 

6,247,000 

900 

105,000 

1,358,900 

43.000 

69,000 


1899 

14 

2,222,000 

19,600 

1,970,000 

1.900 

162,000 

1,522,300 

24,000 

66,000 


1 Does not include 1,708,501 gallons returned, for which no value was given. 

2 Included in “All other States” in 1899. 

2 Includes establishments distributed as follows: In 1909—Arizona, 1; Idaho, 3; Illinois, 1; Iowa, 1; Kan¬ 
sas,!; Minnesota, 1; Montana, 1; Nebraska, 1; New York, 1; Ohio, 1; Oregon,!; Utah, 5; Washington, 1. 
In 1904—Idaho, 3; Minnesota, 1; Nebraska, 3; New York, 1; Ohio, 1; Oregon, 1; Utah, 4; Washington, 1. 
In 1899—Colorado, 1; Illinois, 1; Minnesota, 1; Nebraska, 3; New Mexico, 1; New York, 2; Oregon, 1; 
Utah, 3; and Washington, 1. 


CANE SUGAR. 


While small quantities of cane sugar are produced throughout sev¬ 
eral States in the South, the industry of the country on a commercial 
scale is really confined to the States of Louisiana and Texas,' and the 

ft 

yi a 









































































\'X Co w v 

V 10 A\ 


PLACING SUGAR ON THE FREE LIST. 


statistics of the following tables show the present condition of that 
industry: 


Table 3. —Summary for cane-sugar industry, by States, 1909. 


[Census Bureau, Department of Commerce and Labor.] 


Item. 

Total. 

Louisiana. 

Texas. 

Number of establishments . 

192 

$36,262,000 
$20,336,000 
$2,507,000 
$2,196,000 
$29,351,000 
$9,015,000 

953 

4,000 

188 
oai non 

4 

Capital. 

me nnn 

Cost of materials used. 

$19,910,000 

$2,414,000 

$2,118,000 

$28,703,000 

$8,793,000 

938 

3,876 

y viO>UuV 

$426,000 

nnn 

Salaries and wages. 

Miscellaneous expenses. 

<JP C/U , \J\J\J 

$78,000 
$(148,000 
$222,000 

15 

124 

Value of products. 

Value added by manufacture (products less cost of material). -.. 
Employees: 

Number of salaried officials and clerks. 

Average number of wage earners employed during the year.. 


Table 4.— Quantity and cost of cane, and quantity and value of products obtained there¬ 
from , by States, 1909. 

[Census Bureau, Department of Commerce and Labor.] 


Item. 

Total. 

Louisiana. 

Texas. 

Cane treated: 

Total quantity (tons). 

4,628,200 

4,471,900 

156,300 

Cost. 

$17,605,000 

$17,104,000 

$501,000 

Cane from lands controlled by manufacturers— 

Quantity (tons). 

2,628.800 

2,547,800 

81,000 

Cost. 

$9,781,000 

$9,557,000 

$224,000 

Cane purchased 1 — • 

Quantity (tons). 

1,999,400 

1,924,100 

75,300 

Cost. 

$7,824,000 

$7,547.000 

$277,000 

Products: 



. Total value.. 

$29,941,000 

$29,090,000 

$851,000 

Sugar— 

Total quantity (tons). 

334,100 

325,500 

8,600 

Total value. 

$26,686,000 

$26,017,000 

$669,000 

Brown sugar (open-kettle process)— 

Quantity (tons). 

3,700 

CO 

o 

O -4 

o o 
o o 


Value../..'.. 

$301,000 


Vacuum-pan sugar— 


Quantity (tons). 

330,400 

321,800 

8,600 

Value. 

$26,385,000 

$25,716,000 

$669,000 

First-strike sugar— 

Quantity (tons). 

278,000 

271.800 

6,200 

Value. 

$22,778,000 

$22,273,000 

$505,000 

Second-strike sugar— 

Quantity (tons). 

43.200 

O O 
o o 

CO o 

-r 5g 

1,900 

$130,000 

• Value. 

$3,016,000 

Third-strike sugar— 

Quantity (tons). 

9,200 

8,700 

500 

Value. 

$591,000 

$557.000 

$34,000 

Molasses (liquid product from which more or less sugar has 

been extracted)— 

Quantity (gallons). 

25.280,600 

24,342.600 
$2.826,000 

938,000 

Value. 

$2,889,000 

$63,000 

Sirup (liquid product from which no sugar has been ex¬ 
tracted)— 

Quantity (gallons). 

1,449,900 
$366,000 

943.000 

506,900 

Value. 

$247,000 

$119,000 


1 Includes 48,900 tons, with a value of $173,000, treated on custom basis or on contract. 

























































4 


PLACING SUGAR ON THE FREE LIST 


COMPARATIVE PRODUCTION AND TRADE IN CANE AND BEET SUGAR. 

The rapid relative development in the production, imports, ex¬ 
ports, and consumption of cane and beet sugar in continental United 
States is brought out by the following figures: 

Table 5. — Production, imports, exports, and consumption of sugar in continental 
United States for selected years: 1879 to 1909. 


[Except for cane sugar in 1904, which is an estimate by Willett and Gray, statistics of production are from 
Census Bureau reports; those of imports and exports are compiled from reports of the Bureau of Statis¬ 
tics of the Department of Commerce and Labor.] 


Year. 

Production. 

Imports. 

Exports. 

Retained 
for con¬ 
sump¬ 
tion. 

Total 

(tons). 

Cane 

(tons). 

Beet 

(tons). 

Total 

(tons). 

From non¬ 
contiguous 
United States 
(tons). 

From all 
other 
countries 
(tons). 

1909. 

835,800 

668,900 

243,000 

153,100 

90,800 

334,100 
415,000 
161,300 
150,600 
89,400 

501,700 
253,900 
81,700 
2,500 
1,400 

2,887,100 
2,392,500 
2,009,000 
1,467,000 
914,600 

927,800 
591,000 
313,400 
280,600 
139,200 

1,959,300 
1,801,100 
1,695,600 
1,186,400 
775,400 

94,600 

13.700 
13,500 

23.700 
20,300 

3,628,300 
3,047,700 
2,238,500 
1,596,400 
985,100 

1904. 

1899. 

1889. 

1879. 


THE REFINING INDUSTRY. 

The recent report of the special committee of the House of Repre¬ 
sentatives on the investigation of the American Sugar Refining Co. 
and others affords much interesting material as to the development 
and present condition of the sugar-refining industry in the United 
States. In the following tabular statement, taken from this report, 
have been epitomized the real facts of the industry: 

Table 6. —Consumption of sugar in the United States since 1900, and a comparison of 
that refined by the American Sugar Refining Co. and other refiners. 


Year. 

Amount of 
sugar 
refined. 

Amount 
refined by 
American 
Sugar Re¬ 
fining Co. 

Percentage 
refined by 
American 
Sugar Re¬ 
fining Co. 

Year. 

Amount of 
sugar 
refined. 

Amount 
refined by 
American 
Sugar Re¬ 
fining Co. 

Percentage 
refined by 
American 
Sugar Re¬ 
fining Co. 

1900 . 

1901 . 

Barrels. 

13,943,136 
14,642,099 
16,136,698 
15,868,294 
16,787,584 
16,042,752 

Barrels. 
9,378,234 
8,482,598 
9,193,434 
8,767,040 
9,748,761 
8,484,428 

67.30 
57.90 
56.97 
55.25 
58.07 
52.89 

1906 . 

1907 . 

Barrels. 

17,666,195 

18,201,139 

19,341,779 

19,906,752 

21,010,803 

Barrels. 
9,014,419 
8,966,790 
8,731,430 
8,588,723 
8,853,670 

51.03 

49.27 

45.14 

43.14 

42.14 

1902. 

1908. 

1903. 

1909.. .. 

1904. 

1910. 

1905. 



Independents, when started, and production. 


McCahan. 1894, 600,000 barrels. 

Arbuckle, 1899, 750,000 barrels.. 

Federal, 1904, 600,000 barrels. 

Warner, 1908, 450,000 barrels. 

National, 1900, 2,000,000 barrels. 

Miscellaneous: 

Louisiana planters. 

California and Hawaiian, Henderson, Colonial, Revere, etc 

Domestic beet.'. 

American Sugar Refining Co. 


Production 
of independ¬ 
ents in 1909. 

Production 
of all com¬ 
panies in 
1909. 

Barrels. 

Per cent. 

700,000 

3.25 

1,900,000 

8.70 

1,370,000 

6.30 

550,000 

2.50 

2,170,000 

10.00 

650,000 

3.00 

1,950,000 

9.00 

3,050,000 

14.00 

8,588,723 

43.14 


99.89 



Total 


















































































PLACING SUGAR ON THE FREE LIST. 


5 


Beet sugar leaves the first manufacturing establishment in a refined 
condition, but all cane sugar, which constitutes about four-fifths of 
our consumption, must be refined; consequently, the refining interest 
is the most important factor connected with sugar manufacturing in 
the United States. Therefore, the industrial position of refining 
requires primary consideration. The ability of the refineries to com¬ 
pete with other countries without the aid of tariff protection can not 
be successfully denied. This condition was attested by Mr. Claus 
Spreckels in his statement before the Ways and Means Committee 
in 1909. Mr. Spreckels stated: 

I would be perfectly satisfied if you should finally decide to agree upon free trade 
in both raw and refined sugars. 1 would, of course, appreciate and think we are 
entitled to a moderate protection on refined sugars, but would prefer absolute free trade 
to the present schedule, under which the Sugar Trust is the principal beneficiary and 
enabled to exact special privileges and conditions on sugars produced in Louisiana 
and the Hawaiian Islands. 

It is evident that the country desires a revision of the tariff and expects a reduction 
of duties whenever it can be shown to be reasonable, feasible, and advantageous. 
Personally, I take no stock in the old and threadbare theory that the duty on sugar 
can not be abolished on account of the Government requiring the revenue, and have 
full confidence that your committee and the Senate Finance Committee can, after 
your years of experience, raise the necessary revenue from other sources. 

As far as the production of the domestic sugar is concerned, I claim that beet-sugar 
factories located in proper localities, such as Colorado, California, Utah, Idaho, and 
Oregon, should and, I am informed, can, produce granulated sugar at 2\ cents per 
pound. Of course, if it be the purpose of this Government to impose a tariff which 
will enable the production of articles in unsuitable localities at the expense of the 
American public, then an import duty is necessary and will always have to be main¬ 
tained. 

As far as Louisiana is concerned, I contend that the Sugar Trust is in a position 
to seize at its discretion a large share, if not all, of the benefit of the protection granted. 

As far as our colonies are concerned, they to-day are able to produce sugars in com¬ 
petition with the rest of the world. 

Under the circumstances, I believe the sooner our Government reduces and gradu¬ 
ally wipes out entirely the duty on sugar the better it will be for the country and 
all concerned, of course bearing in mind that the differential afforded refiners should 
be reduced in proportion to the reduction in duties on raw sugar. (Tariff Hearings, 
Committee on Ways and Means, 1909, p. 3389.) 

. This testimony has been amply supported by other persons familiar 
with the industry and it is safe to conclude that the American sugar 
refining industry is fully able to compete with foreign markets in the 
sale of its products. 

Whether our beet-sugar producers can compete successfully in free- 
trade markets of other countries is a question that has been exten¬ 
sively discussed, but definite figures with regard to the relative cost 
of production are unsatisfactory. Mr. J. E. Tucker, treasurer of the 
American Beet Sugar Co., in a letter to the special committee of the 
House of Representatives charged with the investigation of the 
American Sugar Refining Co. (Hearings, p. 1704) states: 

The cost of production varies with both the quality and the size of the crop. There 
can be no fixed cost and it varies each season. 

In the report of the same investigating committee (p. 22), we find 
that the cost of manufacturing beet sugar is lowest in Germany, and 
according to the best-known sugar experts, the cost of producing a 
pound of raw sugar there ranged from 1.96 to 2.07 cents. Adding a 
refining cost of four-tenths of a cent per pound, the cost of producing 
refined beet sugar in Germany would average 2.415 cents per pound. 
The average cost of producing beet sugar as computed from the returns 
of the 11 plants in which the American Sugar Refining Co. is inter- 


6 


PLACING SUGAR ON THE FREE LIST. 


ested is shown not to exceed 3.54 cents per pound. This difference 
between the German and American costs more than offsets the 
freight charges from Germany to the United States. In this con¬ 
nection the following price figures for the countries named lend 
considerable interest: 


Table 7.— Average quotations, net cash, in cents per pound, in 1910. 


Country. 

Raw in 
bond. 

Tax re¬ 
fined. 

Wholesale 
refined tax 
paid. 

Refined 
in bond. 

England. 

2.848 

0.400 

4.101 

3.706 

Germany.. 

2.656 

1.510 

5.150 

3.640 

Austria.. 

2.593 

3.498 

7.298 

3.800 

France. 

3.134 

2.380 

6.450 

4.070 

United States. 

2.840 

1.900 

4.972 

3.532 


The prices of refined sugar in bond, given in this table, when brought 
into comparison with the cost figures already shown for the United 
States, indicate clearly that domestic producers of sugar have nothing 
to fear from free trade in this article. 

The difference between the export price of sugar at Hamburg and 
the wholesale price at New York for several years is brought out by 
the figures of table 8. 


Table 8. —Comparison of export price of sugar at Hamburg, and wholesale price of 
same at New York: 1900 to 1911. 

[Cents per pound.] 


Year. 


Raw sugar. 

Granulated sugar. 

Export 

price 

Hamburg. 

Wholesale 

price 

New York. 

Difference be¬ 
tween export 
price at Ham¬ 
burg and 
wholesale 
price at New 
York. 

Export 

price 

Hamburg. 

Wholesale 

price 

New York. 

Difference be¬ 
tween export 
price at Ham¬ 
burg and 
wholesale 
price at New 
York. 

1900. 

.... 2.24 

4.56 1 

2.32 

2.64 

5.32 

2.68 

1901. 

1.88 

4.04 1 

2.16 

2.29 

5.05 

2.76 

1902.. 

1.43 

3.54 

2.11 

1.79 

4.45 

2.66 

1903. 

1.81 

3.72 ! 

1.91 

2.11 

4.63 

2.52 

1904. 

.... 2.14 

3.97 

1.83 

2.55 

4.77 

2.22 

1905. 

.... 2.55 

4.27 

1.72 

3.00 

5.25 

2.25 

1906.. 


3.68 

1.81 

2.31 

4.51 

2.20 

1907. 

2.05 

3.75 

1.70 

2.40 

4.65 

2.25 

1908. 

.... 2.29- 

4.07 

1.78 

2.63 

4.95 

2.32 

1909 


4.00 

1.65 

2.78 

4.76 

1.98 

1910. 

2.74 

4 18 

1 44 

3 22 

4.97 

1*75 

1911. 

.... 2.82 

4.45 

1.63 

3.20 

5.34 

2 . 14 


TRUST SITUATION. 

Probably no industry in this country has been more closely con¬ 
trolled by industrial combination than the manufacture and refining 
of sugar, and this condition exists to-day. 

Much is said of “ independent’ , sugar producers and of competition 
between refiners and cane producers, but little weight can be given 
to such statements. The House investigating committee, which 
made an elaborate inquiry into the competitive situation in sugar 
during the past year, gave special attention to the relations between 








































PLACING SUGAR ON THE FREE LIST. 7 

beet and cane producers, and reached the conclusion (Report, p. 16) 
that— 

To the 42.14 per cent of the production of sugar in the United States that the Amer¬ 
ican Sugar Refining Co. admits is its own should be added, by any fair rule, 10 per cent, 
the National’s production; 7 per cent, the production of the beet-sugar companies, 
in which the American is interested; and probably 3.25 per cent, the McCahan pro¬ 
duction. This makes a total of 20.25 per cent, which, added to the 42.14 per cent, 
makes a total of 62.39 per cent of the sugar manufacturing and refining industry of the 
United States which is either directly or indirectly controlled or influenced by 
the American, and we may add further that the evidence discloses that competitors 
not within the direct influence of the American are cautious about entering into 
active competition with it, and usually fix their prices in a comfortable vicinity to 
those of the American. 

These findings fully explain liow it was possible recently for sugar 
prices to the consumer to be so easily increased. In further dis¬ 
cussing the trust feature the committee says: 

But the effect of combination among the refiners and manufacturers of raw sugar 
and the presence or absence of healthy competition is surely reflected in the variation 
of the margin between the prices of raw and refined sugar. During the nine years 
prior to the formation of the ‘‘sugar refineries” combination the margin had averaged 
nearly $1.10 per 100 pounds, but in the four years preceding the formation of that 
organization severe competition among the refineries had reduced it to an average of 
79.6 per 100. In 1885 it was 71.2 cents and in 1886 it was 78.1 cents per 100 pounds. 
(Testimony of Mr. Atkins, Hearings, p. 125.) In 1887, prior to the formation of the 
“trust,” 76.8 cents; in 1888, when the Refiners’ Trust had become well organized, it 
was $1.25; in 1889 it was $1,207. In 1890, because of the competition of Philadelphia 
independents (testimony of Atkins, Hearings, p. 126, and of Spreckels), it fell to 72 
cents, rising to 82.8 cents in 1891 and to $1,035 in 1892, after the Philadelphia inde¬ 
pendents Were purchased by the Americans. In 1893 it was $1:153; in 1894 it was 88 
cents; 1895, 88.2 cents; in 1896, 90.8 cents; in 1897, 94.6 cents. The drop between 
1893 and 1894 and the years immediately following can probably be accounted for 
because of the higher price of raw sugar during those years and the consequent greater 
value of the 5 per cent of waste in refining. 

In 1898 the refiner’s margin fell rapidly to 73 cents and in 1899 to 50 cents, the effect 
of the sharp competition of Arbuckle. In 1900, when the Arbuckle “war” was not 
quite so fierce, it rose to 75.4 cents. In 1901, when there was practical peace with 
Arbuckle, it rose to $1,003. It was 91.3 cents in 1902, 91.8 in 1903, 79.8 in 1904, the 
probable effect of beet-sugar production, relatively slight, being shown particularly 
m the last year. In 1905, by which time the American had acquired a large interest 
in beet sugar, it rose to 97.8 cents; in 1908, 88.4 cents; 1909, 75.8 cents; in 1910 it was 
78.4 cents; and in 1911 it was 89.2 cents. It is worthy of note in connection with the fig¬ 
ures for the years 1904 to 1909, inclusive, during which the refiner’s margin ranged lower, 
with the exception of the year.1905, than the years immediately preceding them, 
that the American was subjected to the active and progressive competition of inde¬ 
pendents. 

It is especially worthy of note that in 1889, when the refiners’ margin was $1.25, the 
Sugar Refineries Co. had a practical monopoly, controlling 75 per cent of the pro¬ 
duction. By 1903 it will be remembered that the American had secured control of 
nearly 90 per cent of the industry, and during that year the refiner’s difference was the 
highest in the history of the industry since 1889, being $1,153. 

The climax of the Arbuckle competition is reflected in the margin of 50 cents for the 
year 1899, the lowest in the history of the industry. 

The influence, both of the beet-sugar companies and of the Federal and of Warner's, 
is reflected in the somewhat lower margins prevailing since 1904, and including that 
year. 

That the price of refined sugar had been kept up in order to pay dividends on boun¬ 
teously watered stocks is also evident when we come to consider overcapitaliza¬ 
tion. * * * 

That the overcapitalization of these corporations ana tne payment of dividends on 
watered stocks, so that the same might acquire a market value, has necessitated exces¬ 
sive profits on the real capital invested, and has consequently occasioned higher prices 
for the product and heavier taxation of the consumer, can hardly be questioned by any¬ 
one who conscientiously investigates conditions in this great industry. To what 
exact extent this has increased the price of refined sugar to the consumer it is abso¬ 
lutely impossible to accurately estimate or exactly state, but that the increase for that 
reason is considerable can not be disputed. 


8 


PLACING SUGAB ON THE FREE LIST. 


The contention of the American Sugar Refining Co. that because sugar costs the 
consumer less to-day than it did when that corporation was organized, therefore the 
existence and operation of the corporation has benefited rather than injured the con¬ 
sumer we regard as unsound. Such a contention entirely ignores most important 
considerations, such as improvement in the processes and reduction in the cost of refin¬ 
ing and manufacturing during that period of time; the greater supply of raw material; 
improved methods of cultivating sugar cane and sugar beets; and a perfect host of con¬ 
ditions that are entirely independent of the existence of the American or any other 
sugar refining or manufacturing company. 

Besides, in the last 20 years the reduction in price has been world-wide, embracing * 
in its scope all the countries of the earth, from the most enlightened to the most bar¬ 
barous, and surely no American corporation can claim that it accomplished this result 
in countries where it has no business and where its very name is practically unknown. 
In the opinion of your committee, the reduction in the price of sugar in the last 20 
years to the American consumer did not come because of the organization and opera¬ 
tion of the American Sugar Refining Co. 

Simultaneously with the increase in price of sugar to the consumer 
there lias been a decided decrease in the price paid to the producer 
for the raw material. Louisiana cane growers have never received 
fair treatment from the sugar manufacturers. The well-organized 
condition of the industry, its rapid development, admitted profits, an 
environment permitting the increase of prices to the consumer and 
the payment of less to the producer for the raw material, are valid 
and effective reasons for the removal of the tariff protection, which aids 
in maintaining this undesirable condition. 

REVENUE LOSS PROVIDED FOR. 

The chief argument which has heretofore been made for the reten¬ 
tion of the tariff on sugar is its importance as a revenue producer. 
The committee has given a great deal of time and consideration 
to this special feature of the sugar schedule. Their labor and effort 
has been to accede to the very general and persistent public demand 
for free sugar. The committee earnestly desires to assist the people 
in acquiring this important food product at reduced prices and so 
lighten the burdens of the present high cost of living. However, 
the committee has not been willing to recommend that sugar be 
exempted from import duty without suggesting another source of 
revenue which would make good the loss to the Treasury from the 
sugar schedule and at the same time more equitably distribute the 
tax burden without inflicting hardship at any point. After a very 
thorough investigation of the entire field of revenue possibilities 
the most practicable and just solution of the problem appeared to 
be to extend the operations of the corporation-tax law of 1909, 
and this the committee is doing by reporting simultaneously H. R. 
21213, placing sugar on the free list, and H. R. 21214, extending the 
excise law to individuals and copartnerships. The law as applied 
to corporations brought to the Treasury $33,511,525 in 1911, and 
by extending this measure to business conducted by individuals 
and copartnerships it is believed that the loss in revenue of the 
sugar schedule will be fully cared for. The very desirable end 
sought by this legislation is to remove the duty from an article 
necessary to the existence of every individual and in lieu of the reve¬ 
nue source thus surrendered to levy a very small tax against the 
business of individuals and copartnerships where the income of the 
year exceeds $5,000. The recommendation is that the tax on a 
food product necessary to existence be shifted from those who now 


PLACING SUGAR ON THE FREE LIST. 


9 


struggle with tax burdens on the necessaries of life to the shoulders 
of those who through good fortune and comfortable means are 
amply able to assume a relatively insignificant tax. To illustrate 
the equitable adjustment of the excise tax recommended, a person 
haying an income of less than $5,000 per year would pay nothing, 
while a person whose business brings $10,000 net would pay no tax 
on the first $5,000 and on the second $5,000 would pay only $50 a 
year. 

THE TARIFF AND* THE CONSUMER. 

It was clearly brought out by the special committee investigating 
the American Sugar Refining Co. and others that the full amount of 
the import tax on sugar is borne by the consumer. Mr. Claus Sprcck- 
els (Hearings, p. 2245) testified that the price of refined sugar to the 
American consumer is affected to the full extent of the duty. Fur¬ 
ther, in reply to the inquiry as to whether the exempting of sugar 
from duty would reduce the price by the amount of the duty, Mr. 
Spreckels replied, “By the amount of the duty.” 

Further confirmation of the fact that the full amount of the tariff 
tax on sugar is transferred to the consumer in the form of increased 
prices is found in the evidence of Mr. Wallace P. Willett, a recog¬ 
nized sugar statistical expert, before the special committee referred 
to, who says (Hearings, p. 3547): “Whenever duty is taken off the 
consumer gets the full benefit of the amount of duty taken off and 
also a part of the lower cost of refining.” 

The tariff tax amounts to about 1 \ cents per pound on sugar. As 
this entire tax enters into the price of sugar to the consumer it is easy 
to estimate the consumer’s burden because of tariff duties on sugar. 
The consumption of sugar in continental United States amounted in 
1911 to about 7,663,000,000 pounds, and the application of 1J cents 
per pound to this consumption affords an estimated saving to the 
American consumers from placing sugar on the free list of not less 
than $115,000,000. 

Oscar W. Underwood, Chairman. 

Choice B. Randell. 

Francis Burton Harrison. 

William G. Brantley. 

Dorsey W. Shackleford. 

Claude Kitciiin. 

Ollie M. James. 

Henry T. Rainey. 

Lincoln Dixon. 

William Hughes. 

Cordell Hull. 

W. S. Hammond. 

Andrew J. Peters. 

A. Mitchell Palmer. 


H. Rept. 391, 62-2-2 


10 


PLACING SUGAR ON THE FREE LIST. 


Appendix A. 

A BILL To amend an act entitled “An act to provide revenue, equalize duties and encourage the indus¬ 
tries of the United States, and for other purposes,” approved August fifth, nineteen hundred and nine. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled , That on and after the day following the passage of this act, 
there shall be levied, collected, and paid the rates of duty which are prescribed in the 
paragraphs of this act upon the articles hereinafter enumerated, when imported from 
any foreign country into the United States or into any of its possessions (except the 
Philippine Islands and the islands of Guam and Tutuila), and the said paragraphs 
and sections shall constitute and be a substitute for paragraphs two hundred sixteen 
to two hundred nineteen, inclusive, of section one of an act entitled “An act to provide 
revenue, equalize duties] and encourage the industries of the United States, and for 
other purposes,” approved August fifth, nineteen hundred and nine. 

1. Sugars, tank bottoms, sirups of cane juice, melada, concentrated melada, con¬ 
crete and concentrated molasses, molasses, maple sugar, maple sirup, refined sirups, 
glucose or grape sugar, and sugar cane, shall be admitted free of duty. 

2. Saccharine, sixty-five cents per pound. 

3. Sugar candy and all confectionery not specially provided for in this act or in the 
first section of the act cited for amendment, valued at fifteen cents per pound or less, 
and sugars after being refined, when tinctured, colored, or in any way adulterated, 
two cents per pound; valued at more than fifteen cents per pound, twenty-five per 
centum ad valorem. The weight and the value of the immediate coverings, other than 
the outer packing case or other covering, shall be included in the dutiable weight and 
the value of the merchandise. 

Sec. 2. That on and after the day fodowing the passage of this act, all goods, wares, 
and merchandise previously imported and hereinbefore enumerated, described, and 
provided for, for which no entry has been made, and ail such goods, wares, and mer¬ 
chandise previously entered without payment of duty and under bond for warehous¬ 
ing, transportation, or any other purpose, for which no permit of delivery to the im¬ 
porter or his agent has been issued, shall be subjected to no other duty upon the entry 
or withdrawal thereof than the duty which would be imposed if such goods, wares, or 
merchandise were imported on or after that date. 

Sec. 3. That all acts and parts of acts in conflict with the provisions of this act be, 
and the same are hereby, repealed. 


o 

















62d Congress, ) HOUSE OF REPRESENTATIVES, f Rept. 391. 
8d Session . f \ Part 2. 


PLACING SUGAR ON THE FREE LIST. 


March 7, 1912.—Committed to the Committee of the Whole House on the state of 
the Union and ordered to be printed. 


Mr. Fordney, from the Committee on Ways and Means, submitted 

the following 

VIEWS OF THE MINORITY. 

[To accompany H. R. 21213.] 


We, the undersigned members of the Ways and Means Committee, 
most earnestly and emphatically protest against the passage of H. R. 
21213, which bill proposes to place imported sugar on the free list. 

We wish to call attention to the following reasons for our noncon¬ 
currence in the views of the friends of this measure: 

It is the boldest attempt in the history of our Republic to surrender 
an important and growing industry to foreign importers and foster a 
monopoly. 

It is against the domestic sugar producers and solely in the interest 
of the refiners of imported raw* sugar, commonly known as the Sugar 
Trust, and if enacted into law it will deprive the Government of more 
than $52,000,000 of much-needed revenue. 

DEMOCRATIC CLAIMS. 

The chairman of the Ways and Means Committee, in speaking of 
the producers of domestic beet and cane sugar, says: 

Placing sugar on the free list will reduce their profits, but it will not destroy the 
industry in the United States, and will result in a saving to the American people of 
$107,000,000. 

He also says: 

The bill removing the tax levied at the customs houses on sugar imported into this 
country will have the effect of reducing the price of sugar to the consumer about 
1£ cents per pound. 

Both the above quotations are taken from the typewritten state¬ 
ment given out by Mr. Underwood to the press the day he submitted 
the sugar bill to the Democratic caucus. Let us analyze them. 

c i— 2— . 









2 


PLACING SUGAR ON THE FREE LIST. 


The Hardwick committee has been investigating the sugar question 
for five or six months. Testimony furnished that committee has 
been given under oath. It appears from this testimony, as sum¬ 
marized in the final report of that committee to the House, page 23, 
that the average cost of producing beet sugar in the United States, 
at the present time, is 3.54 cents per pound. On page 3565 of the 
hearings of the Hardwick committee, the statistician employed by 
that committee, namely, Mr. Willett, gives the average price for 
granulated sugar for each year since 1902, as follows: 


1902 

1903 

1904 

1905 

1906 


Cents. 


4. 455 

1907. . 

4. 638 

1908.. 

4. 772 

1909.. 

5. 256 

1910. . 

4. 515 

1911. . 


Cents. 
4. 649 
4. 957 
4. 765 

4. 972 

5. 345 


If placing sugar on the free list will, as Mr. Underwood claims, 
reduce the cost of sugar 1^ cents per pound, it is very evident from 
the official figures above quoted that it will reduce the selling price of 
sugar in the United States far below the cost of producing beet sugar 
in this country. 

On page 23 of the report of the Hardwick committee that com¬ 
mittee shows that the present cost of producing raw cane sugar in 
Louisiana is 3f cents per pound, which is 21 cents per 100 pounds 
above the present cost of producing (refined) beet sugar in the 
Northern and Western States. It would therefore appear that a 
reduction of 1^ cents per pound in the market price of refined sugar 
would hit the Louisiana cane industry even a harder blow than it 
would the domestic beet industry. 

The various beet-sugar companies of the United States made sworn 
statements to the Hardwick committee showing the cost of producing 
sugar and the selling price of the same. The difference between 
these figures would give their profits, included in which would be the 
interest on their investments and plant depreciation. In no single 
case did these figures show that such beet-sugar companies have 
made a profit of 1^ cents per pound. It therefore follows that a re¬ 
duction of 1J cents per pound in the selling price would more than 
wipe out all their profits unless they can reduce the cost of produc¬ 
tion very materially. The only way this cost of production can be 
reduced is to decrease the price of the raw material; that is, to lower 
the price paid the farmer for his beets. In other words, the Demo¬ 
cratic plan for raising a revenue proposes to force the farmer to take 
less for his beets or abandon the industry. There are 71 beet-sugar 
factories in the United States at the present time and some 6 or 8 
others are being built. The average number of farmers raising beets 
for each of these factories is about 1,500. In Michigan the average 
is 2,000 farmers to the factory. In other words, there are some 
112,000 farmers engaged in raising beets in the United States and 
some 34,000 engaged in raising beets in Michigan alone. The Dem¬ 
ocratic Party says to these farmers, we propose to make you pay for 
this reduction in the tariff on sugar. 


ft. WT ^ 

r L<i 


7 













PLACING SUGAR ON THE FREE LIST. 


3 



DEMOCRATS WOULD MAKE THE FARMERS PAY THE COST OF THE 
REDUCTION. 

IIow much of a reduction in the price of beets would it be necessary 
for the factories to make in order to compete with European beet 
sugar? From each ton of beets there are obtained about 250 pounds 
of granulated sugar. At a cost of production of $3.54 per 100 
pounds, the cost of producing this sugar is $8.85. If the cost of this 
ton of beets were reduced $1, the cost of producing this 250 pounds 
of sugar would be $7.85, or $3.04 per 100 pounds. It thus appears 
that by reducing the cost of beets $1 per ton, we will reduce the cost 
of producing sugar 50 cents per 100 pounds. To produce beet sugar 
in this country so that we can compete with the world would require 
that the cost of production be reduced to at least 2£ cents per pound. 
(See Hardwick committee report, p. 22, wherein it is stated that the 
cost of producing refined beet sugar in Germany is from 2.36 to 2.47 
cents per pound.) It would therefore be necessary to reduce the 
cost of producing sugar fully 1 cent per pound, which can only be 
accomplished by reducing the cost of beets $2 per ton. There is not a 
section of the United States wherein the farmers would raise beets if 
the price was reduced $2 per ton. It inevitably follows that to place 
sugar on the free list and thereby reduce the cost of granulated sugar 
\\ cents per pound woul,d reduce the cost of beets to the point where 
no American farmer could afford to raise them. This would stop the 
growing of beets and, we have no hesitancy in saying, that under free 
sugar every beet-sugar factory in the United States would be closed. 
This would destroy a factory investment of $100,000,000 in our beet- 
sugar industry alone. These figures are exclusive of the loss in 
Louisiana, which State, as shown above, can stand free sugar more 
poorly than can the beet section. 

It necessarily follows from the above that the policy of free sugar 
will completely destroy, and that quickly, our domestic beet and 
cane sugar industry. 

Every pound of beet sugar made in the United States is the finished 
product—granulated sugar. It is the only competitor which the 
refining interests have. If this competitor is put out of the way, the 
refining interests will have a monopoly of the sugar industry of the 
United States. The question is therefore pertinent as to the amount 
of competition existing in the refining industry. The Hardwick com¬ 
mittee reports on pages 14 and 15 that the only bona fide competitors, 
or independents, in the refining industry of the United States are the 
Federal Sugar Refining Co., which produces 6.3 per cent of our con¬ 
sumption, and the Warner Sugar Refining Co., which produces 2.5 
per cent of our consumption. This makes a total of 8.8 per cent of 
the sugar used in the United States which is produced by independ¬ 
ent cane refineries. It leaves 91.2 per cent of our sugar to be pro,- 
duced by the American Sugar Refining Co. and its allied refineries. 
The committee distinctly denies (p. 14) that Arbuckle Bros, are inde¬ 
pendent of the influence of the American Sugar Refining Co. 

Not in the palmiest days of the trust, when Mr. Havemeyer ruled 
its fortunes with a rod of iron and an ambition bounded only by the 
confines of this country, did the American Sugar Refining Co. ever 
monopolize such a portion of the sugar consumed in the United States 
as this bill would deliver into their keeping. 


4 


PLACING SUGAR ON THE FREE LIST. 


Another very interesting feature, to show how closely these refining 
industries are allied, is the location of their general offices. The 
American Sugar Refining Co.’s head offices are at 117 Wall Street; 
the National Sugar Refining Co., the Federal Sugar Refining Co., and 
the Arbuckles Bros, have their general offices all located in two build¬ 
ings on Front Street, New York, less than one and one-half blocks 
away from the American Sugar Refining Co. Does anyone think 
that with their offices in such close proximity that any antitrust law 
can keep their officials from getting their heads together in the matter 
of prices ? 

It may be true that immediately following the enactment of a law 
like the one proposed, the price of sugar will drop and be held down 
until the competition from domestic beet sugar is entirely destroyed. 
When thus destroyed, and the market thereby delivered over to the 
refining interests of the United States, it is safe to say that the price 
of sugar will be advanced so that the consumers in this country will 
receive no benefits from the removal of the tariff. The beet-sugar 
industry when once destroyed can not be rebuilt—it is not an indus¬ 
try that can come and go. The factories can not be closed down one 
year, then reopened another, and then close down again. Beets 
must be contracted for a year in advance. The farmer must plant 
his seed in the spring for a crop to be harvested in the following fall. 
When the factory is closed down, the technical force necessary to 
operate it will be scattered and can not be reassembled for a single 
campaign. The factory owners would not contract with farmers in 
the winter for beets to be delivered the following fall when they would 
know to an absolute certainty that four refineries could so lower the 
price of sugar that the factories would be forced to sell the sugar made 
from contracted beets far below the cost of production. As stated 
before, the beet-sugar industry is not one that can be operated this 
year, closed next year, and reoperated the year following. 

THE REFINERS ALL WANT FREE SUGAR. 

Every refiner who appeared before the Hardwick committee 
advocated either a heavy reduction in the duty on sugar or absolute 
free trade. They admitted that such legislation would increase 
their business and curtail or destroy that of their competitors, 
namely, the beet-sugar industry. See the following citations in the 
Hardwick committee hearings: 

Mr. Spreckels, president of the Federal Sugar Refining Co. (pp. 
2276 and 2277). 

Charles H. Heike, former secretary of the American Sugar Refining 
Co. (p. 292). 

William G. Gilmore, partner of the Arbuckle Bros. (pp. 1168 
and 1169). 

James H. Post, president National Sugar Refining Co. (p. 527). 

William A. Jamison, partner Arbuckle Bros. (pp. 1195 and 1196). 

Edwin F. Atkins, vice president American Sugar Refining Co. 
(pp. 85, 86, and 174). 

These are the only refiners who appeared before the committee 
other than the president of the California & Hawaii Refinery, which 
refinery uses sugar produced in Hawaii by its own stockholders. 
In other words, the legislation proposed by the Ways and Means 


PLACING SUGAR ON THE FREE LIST. 5 

Committee is in direct accord with the recommendations of the 
officers of the leading refining companies in the United States, 
which recommendations, these officials admit, would work exclusively 
to their advantage and result in the destruction of their only com¬ 
petitor, the beet-sugar industry. If the Democratic Party passes 
this legislation it surrenders, abjectly, to the refining interests of the 
United States and says plainly to the domestic beet and cane industry 
of this country: 

We believe that your industry is not worthy of existence and that it should be 
destroyed. We prefer to deliver into the hands of a half dozen refiners in this country 
the power to regulate the price of one of the necessities of life and are willing to unite 
with these refiners in the destruction of the domestic industry, in which is invested 
$100,000,000 in the beet States and as much more in Louisiana, and to sqpply which 
over 200,000 of our farmers in the North and South are profitably employed. To do 
this we are even willing to go to the extent of sacrificing $50,000,000 of the United 
States revenues and to trust to the constitutionality of a new method of raising Gov¬ 
ernment revenues, which even the leaders of our party pronounce unconstitutional. 

Another evidence of the closeness of the union between the Dem¬ 
ocratic Party and the Sugar Trust is found in the chemical schedule 
recently passed by the unanimous vote of the Democratic Repre¬ 
sentatives and opposed by the unanimous vote of the Republican 
Representatives. 

Section 43 of the Payne-Aldrich bill places an ad valorem duty 
of 25 per cent on bone black. In the Democratic chemical schedule 
the duty on all items in this section, except bone black, is reduced 
from 25 per cent to 15 per cent. Bone black is taken out of the sec¬ 
tion and placed on the free list. Who uses bone black ? Practically 
no one except the sugar refiners. It is one of the principal items of 
expense in refining sugar. Not a pound is used in the domestic 
sugar industry. The man who uses lampblack in painting his barn 
must pay a 15 per cent duty on the same, but the Sugar Trust, that 
uses millions of pounds of bone black, shall have the duty removed 
entirely, so that it can import the most expensive material used in 
its business without paying any revenue into the National Treasury. 

Now, less than a month after the passage of the chemical schedule, 
the same Democratic Party introduces a bill placing sugar on the 
free list, relieving these same refiners of the burden of $52,000,000 
duty on their raw sugar! Thus the union has been consummated. 

UNION BETWEEN THE DEMOCRATIC PARTY AND THE SUGAR TRUST. 

That the Democratic leaders recognize the completeness of this 
union between the Democratic Party and the refining industry, or 
Sugar Trust, is evidenced by the following citation from the majority 
report of the Wavs and Means Committee on this free sugar bill: 

Beet sugar leaves the first manufacturing establishment in a refined condition, but 
all cane sugar, which constitutes about four-fifths of our consumption, must be refined; 
consequently the refining interest is the most important factor connected with sugar 
manufacturing in the United States. Therefore the industrial position of refining 
requires primary consideration. 

The Democratic Party can not escape the natural effect of this 
unholy alliance between itself and the refineries. Nearly every one 
of these refineries stand convicted, either by the decision of the court 
or by confession of illegal practice in connection with the weighing 
and "sampling of the raw sugars imported by them. They have 


6 


PLACING SUGAR ON THE FREE LIST. 


either been forced by the decree of the court or have voluntarily 
consented to pay into the United States Treasury millions of dollars 
which they have wrongfully withheld from the Government in the 
settlement of customs duties. Not one refinery alone, but several 
have been guilty of this conduct and have been forced by the Treas¬ 
ury officials, under threat of prosecution, to settle with the Govern¬ 
ment. Moreover, it is this same class of people who last summer 
extorted from the consumers of sugar in the United States an addi¬ 
tional profit of 2 cents per pound on all the sugar they sold when they 
found themselves in a position in which they were able to do this, 
because of the fact that the domestic crop of beet and cane sugar 
was not ready for the market. As soon as that crop of domestic 
beet and cane sugar came onto the market they were not only forced 
to check the advance in the price of refined sugar, but were com¬ 
pelled to lower their price more than 2 cents per pound to meet the 
competition of the domestic sugar. It is to the tender mercies of 
these confessed lawbreakers, who did not hesitate to wring from the 
consumers in the United States the last penny they could get for 
their sugar and who did not hesitate to rob the National Government 
when paying their just customs duties, that the Democratic Party 
proposes now to deliver the people of the United States, bound hand 
and foot. 

We congratulate the Democratic Party on this new alliance which 
they have formed. They, the professed party of the people, who 
proclaim from the housetops that they guard sacredly the rights of 
the masses, now enter into an unholy alliance which will destroy 
every particle of competition in fixing the price of one of the necessi¬ 
ties of life, and will place within the hands of a half dozen people the 
opportunity to control, absolutely, the price of sugar. With the 
same piece of legislation they would destroy $200,000,000 of capital 
invested in the United States and say to more than 200,000 Ameri¬ 
can farmers and planters, “You must not raise beets or cane unless 
you do so at a price that will deprive you of all profit.’’ 

This proposed plan of legislation reverses, absolutely, the policy of 
the National Government with its insular possessions. It not only de¬ 
stroys the domestic beet and cane industry in the United States, but 
it strikes with deadly force at the prosperity of Hawaii, Porto Rico, 
and the Philippines. At the same time it removes the preferential 
market which Cuba has in the United States. 

To develop our insular possessions and establish therein a contented 
population, this Government has extended to those islands free 
trade and given them the benefits of marketing their products within 
the protected boundaries of the United States. This proposed 
legislation removes all such advantages and brings these islands into 
open competition with the entire world in the sale of their principal 
article of export. What effect such legislation will have on the 
domestic peace of those islands is problematical. It is quite likely 
to result m such financial depression as will incite insurrection and 
turmoil. 

THIS BILL ABROGATES WITHOUT NOTICE OUR TREATY WITH CUBA. 

The' proposed legislation has a peculiar bearing upon our relation¬ 
ship with Cuba. On January 1, 1904, we entered into a treaty rela¬ 
tionship with that island for a period of five years, under which each 


PLACING SUGAR ON THE FREE LIST. 


7 


country was to extend to the other a 20 per cent preferential treat¬ 
ment or tariff concession. This treaty was to extend for five years 
and indefinitely thereafter until one or the other of the contracting 
parties should give a year’s notice. The principal motive which Cuba 
had in making such a treaty was to secure in the United States a 
market for its sugar. Since the promulgation of the treaty fully 98 
per cent of the sugar exported by Cuba has found a market in the 
United States. If we place sugar on the free list, Cuba would no 
longer have a preferential market for its output in the United States. 
In our markets it would have to compete with the world on an even 
basis. It is idle to suppose, under such conditions, that Cuba will 
continue to grant to American goods a 20 per cent tariff concession 
when entering her markets. The result of this legislation will there¬ 
fore be to destroy the treaty relationship existing between Cuba and 
the United States and thereby retard, if not wipe out, our growing 
export trade to that island, now amounting to more than $60,000,000 
annually. 

This legislation violates the spirit and probably the obligation of 
our treaty with Cuba, as it does not give the required 12 months’ 
notice for the abrogation of that treaty. 

A very serious question which arises in this connection is what 
effect this legislation will have upon the peace and tranquillity of 
Cuba. Will it cause disorder and revolution, which will force the 
United States to enter that island and assume the government 
thereof ? If such will be the result, how will we stand in the eyes of 
the world ? W T ill we not be accused of the enactment of fiscal legis¬ 
lation for the express purpose of bringing about the annexation of 
Cuba ? Such a method of procedure will give the lie to all our prot¬ 
estations and manifestoes concerning the real motive behind our 
various legislative and executive proclamations relative to Cuba. 
Is the Democratic Party ready to espouse the cause of the annexation 
of Cuba ? In no other country is there such a mingling of the black 
and white races, a social condition abhorrent to any southern Demo¬ 
crat. We have in this country a great enough race problem, without 
taking unto ourselves an island whose inhabitants have violated for 
generations the most important law.which we respect for the preser¬ 
vation of the purity of the Anglo-Saxon race. 

With this legislation the Democratic Party reverse the policy of 
the United States Government toward its insular possessions and 
its ward, over which it has assumed indirect control; they introduce 
into those insular possessions hard times and consequent turmoil and 
disorder; they violate every pledge which tins Government has made 
to these islands and to the world, and throw a suspicion upon the 
real motives actuating our relationship to Cuba. Again we ask why 
this is done and who prompted such legislation, and the answer is 
that during the six months that the Hardwick committee was con¬ 
ducting its investigations the only peoplh who came before that com¬ 
mittee with such a request were "the sole beneficiaries of such legisla¬ 
tion, namely, the sugar refiners of the United States. With these 
refiners the Democratic Party, as provided in this legislation, will 
join hands and make common cause against the welfare and prosper¬ 
ity of the people of this country. 


8 


PLACING SUGAR ON THE FREE LIST. 


NATURAL COMPETITION BETWEEN CANE AND BEET SUGAR. 

During recent years practically one-half the world’s output of sugar 
has been produced from beets—some years it is a little more, some 
years a little less—but the average is about 50 per cent beet sugar 
and 50 per cent cane sugar. Between these two kinds of sugar there 
is not only competition, but an irrepressible conflict, officially de¬ 
scribed by the Secretary of Agriculture as follows in his report of the 
“ Progress of the beet-sugar industry in the United States in 1907”: 

Throughout the world’s competition in the production and marketing of sugar, we 
find arrayed the two rivals—the cane-sugar industry and the beet-sugar industry. 
The contest is between two phases of agriculture which are diametrically opposed in 
nearly every respect, geographical location, moral, social and civic ideals, and commu¬ 
nity of interests. It is a contest between the domination of capital, unhampered by 
organized labor or social barriers, on the one hand, and on the other, a branch of indus¬ 
try in which human rights and privileges must receive high consideration. In the 
tropics, cheap labor and bountiful production oppose the more complicated enter¬ 
prises and expensive conditions of the Temperate Zone, where industry is domm ted 
by spirit and policy which places the general welfare above every other consideration. 
To build the sugar industry in this country required intelligence, energy, sacrifice, 
and the indomitable spirit of progress. 

The entire supply of beet sugar comes from Continental Europe 
and the United States, Europe producing at present fourteen- 
fifteenths of the total. The industry in Europe is a little over 100 
years old, and long since reached the stage where beet sugar has not 
only completely supplanted cane sugar in domestic consumption, but 
has furnished a considerable quantity for export. Most progressive 
nations of continental Europe have followed practically the same 
general policy; namely, to place a high tariff against the importation 
of foreign sugar, and raise a revenue by the imposition of an internal- 
revenue tax on the home consumption. 

The Brussels convention of 1903 provided that the excess tariff 
duties above internal-revenue tax, which excess is called surtax, 
should not exceed 48.2 cents per 100 on raw sugar, and 52.5 cents per 
100 on refined sugar. The internal-revenue tax is not applied to 
sugar for export. As Germany, Russia, Austria-Hungary, France, 
and Holland all produce more sugar than they consume, they are 
able to enter the markets of the world at a lower price than they 
charge their own citizens for sugar. Under this arrangement, 
Europe produces annually about 7,500,000 long tons of sugar, which 
at 4 b cents per pound, or $100 per long ton, amounts in value to 
$750*000,000. 

Foremost among the European nations in the production of sugar 
is Germany, whose average plantings for the past three years amount 
to 1,107,000 acres, from which she has harvested an annual average 
crop for the same years of 2,082,000 long tons of sugar valued at 
$208,000,000; that is, on an actual planted area equivalent to only 48 
of our townships she produces annually about two-thirds as much 
sugar as the United States consumes, harvesting a crop valued at 
over $200,000,000 per year. (F. O. Licht’s annual report published 
in Willett & Gray’s Weekly Statistical Sugar Trade Journal, Jan. 12, 
1911.) 

The reason why European economists and statesmen .are unani¬ 
mous in the support of the uniform sugar policy of the Continent is 
not only that they are able to become, through this policy, independ¬ 
ent of tropical countries for one of the necessities of life, and are able 


PLACING SUGAR ON THE FREE LIST. 


9 


to produce a yearly crop valued at $750,000,000, but also that they 
have found the effect of beet culture to be most beneficial to the 
other agricultural crops of Europe. Official data collected by Ger¬ 
many shows that the effect of beet culture in that country has been 
to cause the following increase in the production of other crops: 
Wheat, 24 per cent; rye, 15 per cent; barley, 25 per cent; oats, 41£ 
per cent; and potatoes, 102 per cent. (Page 2787 of hearings.) 1 So 
important is this effect that some of the leading economists and 
statesmen maintain that they could well afford to pursue their present 
sugar policy even if no money were made on the sugar crop itself. 
(Hearings, p. 2507.) 

In Senate Document No. 22, Sixty-first Congress, first session, 
page 27, the Secretary of Agriculture officially states that the area 
in the United States having soil and climatic conditions adapted to 
the production of satisfactory sugar beets is at least 274,000,000 
acres; that is, we have 274 times as much land adapted to beet cul¬ 
ture as is used by Germany in any one year in producing two-thirds 
as much sugar as the United States consumes. The Secretary of 
Agriculture further states that, 

If we only consider those localities in this country that have the best facilities for 
taking up the beet-sugar industry, and limit the territory to that portion capable of 
producing our own consumption of sugar, it might be said that the United States 
possesses some material advantage over Europe. (Progress of the Beet Sugar Industry 
in the United States.) 

In view of the results obtained in Europe, of the officially deter¬ 
mined beet area in the United States, and the natural advantages 
of that area, it is preposterous to maintain that the beet-sugar 
industry is a hothouse industry in the United States. The only 
thing necessary for the consistent and continuous development of 
that industry in our own country to a point where we shall produce 
our own sugar is the unquestioned maintenance of a fiscal policy 
that will equalize the difference in the cost of production in the 
United States and abroad. 

PRICE PAID FARMERS FOR BEETS IN EUROPE AND THE UNITED STATES. 

The testimony taken before the hearings of this committee con¬ 
clusively demonstrates that the beet-sugar manufacturers in this 
country are paying the farmer considerably more for beets than they 
did a few years ago. In California the price of beets has recently 
been increased 75 cents a ton, which makes the price for the quality 
of beets usually raised in that section $6 per ton. (Hearings, p. 3873.) 

In Utah and Idaho the ruling price is $5 per ton and freight, which 
makes the beets cost, delivered at the factory, over $5.60 to $5.65 
per ton. (Hearings, p. 797.) 

In Colorado and Nebraska the price averages from $5.50 per ton 
to $6.50 per ton. (Hearings, pp. 400, 888.) 

In Michigan and Ohio the customary contract calls for a payment 
by the factory of $4.50 per ton for beets testing 12 per cent sugar 
with 33J cents per ton for each additional per cent of sugar in the 
beets, with a minimum guarantee of $5 per ton. (Hearings, p. 719.) 


1 The hearings referred to on this and subsequent pages are those of the Hardwick committee ap¬ 
pointed by the Sixty-second Congress to investigate the American Sugar Refining Co. and others. 



10 


PLACING SUGAR ON THE FREE LIST. 


Under such form of contract coupled with the freight charges paid 
by the factory, the average price paid by one of the leading Michigan 
companies in 1910 was $6.91 .per ton. (Hearings, p. 712.) 

As contrasted with the above cost of beets to the American manu¬ 
facturer, we have the officially determined cost of beets per ton of 
2,000 pounds in the open market in France and Germany as follows: 


1902- 3. 

1903- 4. 

1904- 5. 

1905- 6. 

1906- 7. 

1907- 8. 

1908- 9. 

1909- 10. 

1910- 11. 

Average. 


France. 

Germany. 

$4.03 


3.92 

. 

3.91 

$4. 34 

4.31 

4.32 

3.81 

4.04 

3.98 

4.23 

4.18 

4.60 

4. 27 

4.73 


4.86 

4.05 

4.45 


German data is taken from the official quarterlies of the German 
imperial statistical office. French data is taken from the official 
Bulletins de Statistique, published by the French ministry of finance. 
All the above figures are furnished by the United States Bureau of 
Statistics of the United States Department of Commerce and Labor, 
Washington, D. C. (Hearings, pp. 3973-3974.) 

Data is not at hand concerning the quality of the French beets, but 
the same German authority referred to above is quoted by the United 
States Bureau of Statistics, showing the following extraction of raw 
sugar from the German beets. (Hearings, p. 3974.) 


Per cent. 

1904- 5. 14.92 

1905- 6. 14.71 

1906- 7. 14.97 

1907- 8. 14.96 

1908- 9. 16.77 

1909- 10. 15.11 

1910- 11. 15.96 

Average..*.. 15.34 


That is, from 2,000 pounds of these beets the German factories 
during the years in question obtained an average extraction of 306.8 
pounds of raw sugar. According to the method universally adopted 
by the Government in changing raw sugar to equivalents granulated, 
namely, that each 100 pounds of such raw sugar is equivalent to 90 
pounds granulated sugar, the 306.8 pounds of raw sugar obtained by 
the German factories is equivalent to 276 pounds of refined granu¬ 
lated sugar. 

To produce this amount of granulated sugar requires a beet testing 
17J per cent when bought from the farmer. For such beets the 
manufacturers in Michigan and Ohio pay the farmer $6.33 per ton of 
2,000 pounds, the Colorado manufacturers pay $5.87 per ton; the 
California manufacturers pay $6 per ton; the Utah-Idaho manu¬ 
facturers pay $5.65 per ton. As shown by witnesses before this com¬ 
mittee, pages 719, 797, 3725, and as compared with the German farmer, 
the Michigan farmer received a protection of $1.88 per ton, the Colo¬ 
rado farmer $1.42 per ton, the Utah-Idaho farmer $1.20 per ton, the 
California farmer $1.55 per ton. 




























PLACING SUGAR ON THE FREE LIST. 11 

As compared with the French farmer, the Michigan farmer receives 
a protection of $2.28 per ton, the Colorado farmer $1.82 per ton, the 
Utah-Idaho farmer $1.60 per ton, the California farmer $1.95 per ton. 

The German manufacturer pays $1.61 per 100 pounds for the 
granulated sugar he can extract from the beets, whereas the Michigan 
manufacturer pays $2.29 per 100 pounds; the Colorado manufacturer, 
$2.09 per 100 pounds; the Utah-Idaho manufacturer, $2.05 per 100 
pounds, the California manufacturer, $2.17 per 100 pounds. 

In the cost of his raw material alone the American manufacturer 
has a handicap as compared with the German manufacturer as fol¬ 
lows: In Michigan 68 cents per 100 pounds, in Colorado 48 cents per 
100 pounds, in Utah-Idaho 44 cents per 100 pounds, in California 56 
cents per 100 pounds. 

EUROPEAN AND AMERICAN WAGES PAID IN BEET SUGAR INDUSTRY. 

The following table, giving the average daily wages of employees 
in French beet-sugar factories for the years 1902-3 to 1909-10, fioth 
inclusive, is taken from the official Bulletins de Statistique of the 
French finance department and is furnished the committee by the 
United States Department of Commerce and Labor. (Hearings, 
p. 3974.) 


Average daily wages of employees in French beet-sugar Jactories. 
[From the official bulletins de Statistique of the French finance department.] 



Men. 

Women. 

Children. 

. Years. 

Value. 

United 

States 

equiva¬ 

lent. 

Value. 

United 

States 

equiva¬ 

lent. 

Value. 

United 

States 

equiva¬ 

lent. 

1902-3. 

Francs. 

3.97 

$0,766 

Francs. 
2.18 

$0.421 

Francs. 

1.71 

$0,330 

1903-4. 

3.98 

.768 

2.15 

.415 

1.69 

.326 

1904-5. 

4.03 

• .778 

2.13 

.411 

1.67 

.322 

1905-6. 

4.07 

.786 

2.18 

.421 

1.73 

.334 

1906-7. 

4.14 

.799 

2.26 

.436 

1.75 

.338 

1907-8. 

4.20 

.811 

2.26 

.436 

1.75 

.338 

1908-9. 

4.22 

.814 

2.32 

.448 

1.70 

.328 

1909-10. 

4.32 

.834 

2.39 

.461 

1.75 

.358 


Department of Commerce and Labor, 

Bureau of Statistics. 

O. P. Austin, Chief of Bureau. 




















12 


PLACING SUGAR ON THE FREE LIST. 


On November 16, 1908, pages 33-36 of the hearings of the Ways 
and Means Committee, that committee took the statement of W. H. 
Baird who had just completed a personal inspection of the American 
and European beet factories for the purpose of determining the rate 
of wages paid therein. His statement shows the following: 


American wages. 


General foreman, $150 to $100 per month_ 

Beet shed men, 221 cents per hour. 

Flume feeders, 17^ cents per hour. 

At the beet washers, 171 cents per hour. 

At the beet cutters, 20 to 25 cents per hour.. 
Sharpening knives, 22$ to 27-1 cents per hour 
At the diffusion battery, 25 cents per hour.. 


Battery helpers, 20 cents per hour 


Carbonation men, 25 cents per hour. 

At the filter presses, 17i to 25 cents per hour 


Evaporation men, 25 cents per hour. 

Vacuum-pan boilers, $100 to $125 per month 

Firemen, 25 cents per hour. 

Boiler cleaners, 20 cents per hour. 

Blacksmiths, 40 cents per hour. 


European wages. 


Germany, $22 to $37.50 per month. 

Germany, 6 cents per hour; Austria, 7 
cents per hour. 

Germany, 61 cents per hour; Austria, 7 
cents per hour. 

Germany, 5 cents per hour; Austria, 5 \ 
cents per hour. 

France. 8 to 10 cents per hour. 

France, 5.7 to 10 cents per hour. 

Germany, 6 to 10 cents per hour; Austria, 

4 to 5 cents per hour; France, 9 to 10 
cents per hour. 

Germany, 4 cents per hour; Austria. 4 to 6 
cents per hour; France, 9 to 10 cents per 
hour. 

Germany, 5 cents per hour; Austria, 5 
cents per hour; France, 8 cents per hour. 

Germany, 4 to 5 cents per hour; Austria, 

5 cents per hour; France, 7 to 8 cents per 
hour. 

Germany, 4.4 cents per hour; Austria, 5.8 
cents per hour; France, 8 cents per hour. 

Germany, $18 to $22 per month; Austria, 
$18 per month. 

61 to 7 cents per hour. 

France, 6 cents per hour. 

Germany, 71 cents per hour; Austria, 7 
cents per hour; France, 8 cents per hour. 


FACTORY WAGES IN THE UNITED STATES. 



' Per day. 

California: 

Whites. 

$2.00 to $2.75 

Asiatics. 

2.10 to 2.50 

Colorado: 

Whites. 

2.50 to 2.75 

Asiatics. 

2.50 

Utah, Whites.. 

2.50 

Field labor. 

1.65 to 2.50 



The above is taken from the hearings, pages 2672-2677. 

If the American manufacturer of beet sugar is to compete with the 
European manufacturer the tariff must cover the difference in the 
cost of production at home and abroad. 


DEVELOPMENT OF BEET-SUGAR INDUSTRY IN THE UNITED STATES. 


The real development of the beet-sugar industry in the United 
States dates from the passage of the Dingley Tariff Act in 1897, at 
which time there were only 6 beet-sugar factories in this country 
producing 37,500 long tons of sugar per year. In the fall of 1911 
there are 71 sugar factories in active operation which will produce 
this season approximately 525,000 long tons of sugar. Last year 
there was produced in this country 455,000 long tons of sugar from 
429,000 acres of beets. There is thus a gain of over 1,200 per cent 
since the passage of the Dingley law. 




































PLACING SUGAR ON THE FREE LIST. 


13 


The following is a table taken from page 706 of the hearings, show¬ 
ing the development of the beet-sugar industry from the fall of 1891 
to the fall of 1910, both inclusive, giving the number of factories, the 
number of acres, and the pounds of sugar made each year: 


Years. 

Num¬ 
ber of 
facto¬ 
ries. 

Acres. 

Pounds of 
sugar. 

1891-2. 

6 

7,155 
13,128 
19,645 
19,538 
22,948 
57,239 
41,272 
37,400 
135,305 
132,000 
194,725 
259,513 
292.295 

1 252; 100 
307,364 
376,074 

1 370,984 
| 364,913 
461,055 
429,014 

12,004,838 
27,083,288 
45,191,296 
45.006,000 
65,453,000 
84,081,000 
90,491,670 
72,735,000 
163,458,075 
172.164,000 
365,402,000 
437,837.000 
466,222,000 
469,777,000 
625,481,228 
967,224,000 
927,256.430 

1892-3.;. 

6 

6 

1893-4. 

1894-5. 

5 

1895-G. 

7 

1896-7. 

7 

1897-8.. 

9 

1898-9. 

15 

1899-1900. 

31 

1900-1. 

11 

1901-2.. 

1902-3_ 

44 

1903-4. 

53 

1904-5. 

51 

1905-6... 

52 

1906-7... 

63 

1907-8. 

63 

1908-9. 

62 

851,768,000 

1,009.332,800 

1,019,692,800 

1909-10. 

65 

1910-11. 

64 



Undoubtedly the gain would have been much greater had there 
not been repeated modifications of the sugar tariff‘which aroused 
feelings of uncertainty and insecurity. 


RECENT MODIFICATIONS IN THE SUGAR SCHEDULE. 


In 1898 Hawaii was formally annexed to the United States, thus 
making permanent its free-trade relations which had formerly 
depended upon treaty. This has resulted in an increase in the 
Hawaiian sugar crop from 204,833 long tons in 1897 to 506,096 long 
tons in 1910. (See Willett and Gray’s Weekly Statistical Sugar 
Trade Journal, Jan. 5, 1899, and Jan. 4, 1912.) 

In 1900 Porto Rico was granted a concession in the tariff and two 
years later was given absolutely free trade with the United States. 
This has resulted in an increase in the Porto Rican sugar crop from 
85,000 long tons in 1902 to 295,000 long tons in 1910. (See Willett 
& Gray’s Weekly Statistical Sugar Trade Journal, Jan. 7, 1904, and 
Jan. 4, 1912.) 

In 1903 Cuba was granted a 20 percent concession in the tariff. 
This has resulted in an increase in the Cuban sugar crop from 1,040,228 
long tons in 1903 to 1,804,349 long tons in 1909-10. (See Willett & 
Gray’s Statistical Sugar Trade Journal, Jan. 5, 1905, and Jan. 4, 1912.) 

Two different Congresses discussed the Philippine question, finally 
granting to those islands a concession of 25 per cent in the tariff, with 
a provision that all money collected on Philippine importations 
should be paid into the insular treasury. 

In 1909 the Payne-Aldrich bill was passed, reducing the duty on 
refined sugar 5 cents per 100 pounds and granting the free importa- 





























14 


PLACING SUGAR ON THE PREE LIST. 


tion of 300,000 tons of Philippine sugar, with a concession of 25 per 
cent on the balance of the Philippine crop shipped to the United 
States. 

In view of the repeated modifications in the sugar schedule, the 
net effect of which has been to reduce the amount of full duty paid 
sugar from 74.1 per cent of our entire annual consumption to 2.1 per 
cent of our entire annual consumption, it would seem in all fairness 
the sugar schedule has already stood its fair reduction from the 
statutory rate fixed in the Dingley bill. 

The wonder is that our domestic beet-sugar industry has made any 
progress during the past 10 or 12 years. The progress made, how¬ 
ever, has demonstrated without doubt that this country has all the 
natural advantages necessary for the production of its supply of sugar. 
It is only necessary to keep safeguarded those advantages by such 
fiscal regulations as shall equalize the cost of production at home and 
abroad. If this policy were once definitely determined upon, and 
subsequently maintained, we have every reason to believe that the 
development of our domestic sugar industry would go forward by 
leaps and bounds. 

Under our free-trade relations with Porto Rico, Hawaii, and the 
Philippine Islands the sugar industry in those islands has been 
increasing very rapidly. Fully one-half our sugar now comes from 
Porto Rico, Hawaii, Philippine Islands, and continental United States. 
(See Willett and Gray’s Weeklv Statistical Trade Journal, Jan. 5, 
1911.) 

The existing tariff with its various modifications has therefore 
served to develop: 

1. The domestic sugar industry of the United States. 

2. The sugar industry of Porto Rico, Hawaii, and the Philippine 
Islands, all of which islands belong to the United States. 

3. The sugar industry in Cuba, which Republic is so intimately 
related to the United States. 

It thus appears that practically our entire sugar consumption 
comes from the United States, its insular possessions, and the island 
of Cuba, which occupies a particularly intimate relation to the 
United States. At the same time our tariff on sugar is so adjusted 
that we obtain from it fully one-sixth of our total custom receipts. 

FULL TARIFF IS NOT ADDED IN FIXING PRICE TO THE CONSUMER. 

Whenever it happens, as in the case of Jast fall, that the preceding 
sugar crop of Cuba is short and we are temporarily governed by 
European conditions and subject to European shortages, enabling 
the refiners to advance the price of their refined sugars made from 
previously purchased cheap Cuban raws, the domestic crop of beet 
and cane sugar comes on the market in the early fall, and, because of 
competition between beet-sugar manufacturers, fixes the price of sugar 
independent of European conditions and the machinations of a few 
eastern refiners. 

If we should adopt the policy of free trade in sugar, it would not 
only destroy the domestic beet-sugar industry of continental United 
States, but would at the same time injure the development of Porto 
Rico, Hawaii, and the Philippines, and at the same time render less 
prosperous the island of Cuba. 


PLACING SUGAR ON THE FREE LIST. 15 

That tho statutory tariff ot $1.68J per 100 pounds of 96° sugar is 
not the effective tariff is conclusively shown by the following: 

During the calendar year of 1897 (the first calendar year after the 
passage of the Dingley bill) the amount of sugar consumed in the 
United States was 2,002,902 long tons. Of this amount 1,483,544 
long tons, or 74.1 per cent, paid full duty. During the calendar year 
1910 the total consumption of sugar in the United States was 3,350,355 
tons, of which amount 72,393 long tons, or 2.1 per cent, paid full 
duty. 

The sugar imported free from Cuba (the only other sugar paying 
any duty) amounted to 1,640,182 long tons, all of which paid 80 per 
cent of the full duty. The balance of the sugar used in the United 
States was duty free. In other words, of the total consumption of 
the sugar in the United States during the calendar year 1910, 2.1 per 
cent paid full duty; 48.9 per cent paid 80 per cent of the full duty, 
and the balance, or 49 per cent, paid no duty. (See Willett and Gray’s 
Weekly Statistical and Trade Journal, Jan. 5, 1911.) Under such 
circumstances it is idle to contend that the full statutory tariff is used 
in fixing the general price of sugar in the United States. 

The domestic crop of beet and cane sugar comes on the market at 
the very time when Cuban sugars are seeking a market in the United 
States. As the domestic beet sugar is a finished product, its effect is 
to bear the price of refined sugar, carrying the price of raw sugar 
down with it so that the price of Cuban sugar in New York, with the 
regular duty on such sugar added during those months from 40 cents 
per 100 to 99 cents per 100 below the world’s price plus the full duty. 

A remarkable illustration of the truth of this statement occurs in 
the condition of the market for the 12 months beginning Septem¬ 
ber 1, 1909. 

During these 12 months the equivalent New York price for full 
duty paid 96° sugar, based on European quotations, averages $4,868 
per 100 pounds. The actual price paid in New York for the same 
grade of sugar during the same year was $4,242 per 100 pounds, or 
$0,626 below the European parity, or $0,289 below the full Cuban 
concession. This makes the effective tariff on 96° sugar during the 
year to be not $1,684 per hundred pounds, but $1,059 per 100 pounds. 

If we consider the months during which Cuban sugar was actually 
on the market and dominating the market, viz, from January i, 
1910, to September 1, 1910, the figures are even more startling. 
During this period of nine months the average price for full duty-paid 
96° sugar was $5,021 per 100 pounds, while the average current quo-, 
tations in New York market for 96° sugar during the same months 
was $4,237 per 100 pounds or $0,784 per 100 pounds below European 
parity. 

It thus appears that in marketing the crop harvested during the 
first half of 1910, the Cubans not only failed to get the benefit of the 
tariff concessions, but actually sold their sugar at an average of 
$0,447 per 100 pounds below the entire tariff concession. 

The wholesale grocer bought refined sugar at an average price for the 
entire year within 12.1 cents per 100 pounds of the European raw 
sugar price plus our full duty. During the nine months from January 
1 to September 1, 1910, which covers the most active distributing 
period of the year, the refiner was actually selling refined sugar at 
3.7 cents per 100 pounds less than European parity for raw sugar, 


16 


PLACING SUGAR ON THE FREE LIST. 


plus full duty. During June, July, and August, while the fruit 
season was on and the consumption of sugar was increased, the New 
York price of raws averaged $0,812 per 100 pounds below the cost of 
European raw sugar laid down in New York full duty paid. 

Nor did the consumer’s benefit stop there. The domestic beet 
sugar was marketed between October 15, 1909, and May 1, 1910. 
During these months the average New York net cash price of Eastern 
granulated was $4,993 per 100 pounds. The average net cash price 
received by the Michigan Sugar Co. (which is taken as an average 
for beet sugar) for its sugar crop of that year was $4,748 per 100 
pounds, or 24|cents per 100 pounds less than the average cane price 
for these months, or, in other words, during these seven months of 
the year, the people of the great Central States were paying for a 
large part of their granulated sugar one-fourth of a cent below the 
ruling price for refined cane sugar, which price of refined cane sugar 
was five-eighths of a cent a pound below the price based on European 
parity plus full duty. This makes the actual price of beet sugar to 
nave been seven-eighths of a cent per pound cneaper than it would 
have been had the refiner purchased European raws paving full duty 
thereon and had there been no domestic beet sugar industry. The 
Cuban concession and the domestic beet crop saved the consumer in 
the Central States seven-eighths of a cent a pound on their purchase 
of granulated sugar between October 15, 1909, and May 1, 1910. 
(Hearings, pp. 2524-2532.) 

From January 1 , 1904, when the Cuban treaty went into effect, to 
January 1, 1911, the price of raw sugar in New York, even taking into 
consideration the months in which there was no Cuban sugar to be 
obtained, averaged 24 cents per 100 pounds less than the world’s 
price plus full duty. (Hearings, p. 3402.) If, however, the figures 
are compared during the first four months of each calendar year when 
the Cuban crop is actually being purchased, it will be found that the 
New York quotations for 96° sugar averaged 34 cents per 100 
pounds below the world’s price plus full duty. (Hearings, pp. 2524- 
2532.) 

COST OF PRODUCING BEET SUGAR IN THE UNITED STATES. 

Aside from the advantages of beet culture to other agricultural 
crops, which advantage is as great in this country as in Europe, there 
are certain other features which make the economical value of pro¬ 
ducing our own sugar much greater than the economic value of refin¬ 
ing in this country imported raw sugars. The testimony taken by the 
committee fully establishes the fact that the present average cost of 
producing beet sugar in the United States is not over 3^ cents per 
pound, a reduction of from 30 to 40 cents per 100 pounds below the 
cost of producing sugar in this country 10 years ago, thus demonstrat¬ 
ing the truth of the claim made by the friends of the industry when 
contending for the establishment of a protective tariff. 

Jv. 

*•« 


PLACING SUGAR ON THE EREE LIST. 


17 


Oil pages 2379 and 2380 of the hearings is found the cost of pro¬ 
ducing beet sugar for the season of 1910-11 for each of the following 
companies: 

Per 100 pounds. 


Michigan Sugar Co.. $3.48 

Great Western Sugar Co. 3. 43 

Billings Sugar Co. 3. 49 

Scott’s Bluff Sugar Co. 3. 85 

Amalgamated Sugar Co. 3. 05 

Lewiston Sugar Co. 3. 03 

Utah-Idaho Sugar Co. 3. 53 

Alameda Sugar Co. 4. 32 

Spreckels Sugar Co. 2. 70 

Menominee Sugar Co. 4. 39 

Continental Sugar Co. 4. 08 

Iowa Sugar Co.... 5.14 

Carver County Sugar Co. 3. 75 


It is explained fully that these are the figures for the year 1910-11 
and that they do not cover the items of selling expense, including 
brokerage, discount, insurance, storage, nor do they include any 
charge for plant depreciation or interest on the investment. 

The Alameda Sugar Co., Menominee Sugar Co., Continental Sugar 
Co., Iowa Sugar Co., and Carver County Sugar Co. are small pro¬ 
ducers; the output of the others is much greater. 

The entire cost of producing beet sugar is spent at home for labor 
and material, while the amount spent for labor and material in 
this country in the process of refining imported raw sugar is only 
from 40 to 50 cents per 100. It therefore appears that in the matter 
of the purchase of labor and material at home the domestic beet- 
sugar industry has seven times as great an economic value as the 
refining-sugar industry. 

RELATIVE ECONOMIC VALUE OF THE DOMESTIC SUGAR INDUSTRY AND 
THE REFINING INDUSTRY. 

Mr. Lowry, agent of the Federal Sugar Refining Co., says (p. 
1639), that a $10,000,000 refinery produces 6.3 per cent of the sugar 
we consume, whereas $100,000,000 invested in the beet-sugar indus¬ 
try only produces 15 per cent of the sugar we consume. This state¬ 
ment is decidedly unfair and misleading. A refinery simply refines 
raw sugar at an expense of from 40 to 50 cents per 100 pounds for 
labor and material. All the raw sugar it uses comes from abroad 
and represents investments in foreign countries using cheap labor, 
such as that of Java, which is paid only 12 to 15 cents per day. Mr. 
Lowry states (hearings, p. 3350), that the average cost of raw sugar 
for the past 11 years is $2,443 per 100 pounds, which is practically 
five times the cost of refining. To keep a $10,000,000 refinery in 
operation must therefore require an immense investment in the 
producing of the raw sugar which it refined. All this money is 
invested abroad, is actually foreign capital, employs cheap labor, 
and pays not $1 to American labor or American institutions. More¬ 
over, to enable this $10,000,000 refinery to refine 6.3 per cent of the 
sugar we consume requires that we send abroad yearly f i 1,500,000 
to buy its raw sugar, produced on foreign soil by foreign labor and 
foreign capital. 

H. Rept. 391, 62-2, pt 2-2 















18 


PLACING SUGAR ON THE FREE LIST. 


Per contra. The $100,000,000 invested in the domestic beet-sugar 
industry in the production of 15 per cent of our annual consumption 
is all invested in the United States, and represents the capital used 
not merely in the act of refining but in the entire production of refined 
sugar from the beet. It corresponds to the combined investment in 
the refining industry and the raw-sugar production. It is all home 
capital, invested at home, and pays good American wages. To buy 
its products the American people send no money abroad. Para¬ 
phrasing Lincoln’s celebrated statement, we would say that if we buy 
our sugar abroad, the foreigner has the money and we have the sugar; 
if we make it at home we have both the money and the sugar. 

GENERAL DISTRIBUTION OF THE DOMESTIC BEET INDUSTRY. 

The refining industry is necessarily confined to a few seaport towns, 
and the entire industry is concentrated in the hands of a few indi¬ 
viduals. 

Our 71 beet-sugar factories are scattered through 16 States, as 
follows: Arizona, 1; California, 10; Colorado, 17; Idaho, 4; Illinois, 
1; Kansas, 1; Michigan, 17; Minnesota, 1; Montana, 1; Nebraska, 
2; Nevada, 1; Ohio, 3; Oregon, 1; Utah, 6; Iowa, 1; and Wisconsin, 
4. The advantages of the industry are thus localized throughout the 
interior of the county. No other industry has been developed which 
works so in harmony with the national policy of irrigation and 
reclamation. The arid West is far removed from centers of popula¬ 
tion, and it has been difficult to develop the agricultural resources of 
that territory on account of the fact that freight rates to consuming 
markets are so high. When farmers are obliged to pay freight from 
these arid districts to such centers of population as Minneapolis and 
Chicago on the entire commodity grown from the soil, there is very 
little profit left. When these farmers raise beets it is necessary to 
transport to these centers of population only from 12 to 13 per cent 
of the weight of the crop in the form of the finished product. The 
sugar-beet crop is better able to stand the cost of transportation than 
is any other crop in the arid districts. So important is this fact that 
nearly every meeting of the National Irrigation Congress during the 
past 10 years has passed resolutions condemning any attempt to 
destroy the beet sugar industry by tariff reduction. 

Owing to the fact that the beet-sugar factories are distributed 
throughout the interior of the country, Mr. Lowry claims (p. 3351) 
that they enjoy an average freight protection of 25 cents per 100 
pounds. Such a statement is entirely at variance with the facts 
and overlooks the all-important point that all beet sugar is sold at a 
delivered price and that the manufacturer must pay the rate of 
freight on his product from the factory to the point of destination. 
The population in the western mountain States is so sparse that 
only a small amount of sugar produced in those States is consumed 
at home. The sworn testimony before the committee (pp. 3971- 
3973) shows that the actual average freight protection on the sugar 
produced by the Michigan Sugar Co. is 5.82 cents per 100 pounds, 
and that the actual freight protection enjoyed by the Great Western 
Sugar Co. of Colorado, is 2.32 cents per 100 pounds; while the 
Utah-Idaho Sugar Co. suffers a freight handicap of 2.3 cents per 100 
pounds, the Alameda Sugar Co. from 3 to 5 cents per 100 pounds, 


PLACING SUGAR ON THE FREE LIST. 19 

and the Southern California Sugar Co. a handicap of from 30 to 35 
cents per 100 pounds. (Hearings, pp. 3968-3973.) 

In many instances in the West the effect of the establishment of a 
beet-sugar factory has been to quadruple the value of farm beet 
lands tributary to the factory. In such States as Michigan, Wiscon¬ 
sin, and Ohio the effect has been in many instances to double the 
value of such lands. The rental value of lands has increased in 
proportion. In a few years after the establishment of a factory 
there is noticeable improved conditions in agriculture, better yields 
in other crops, better fences and farm buildings, graveled and stone 
roads, increased deposits by farmers in savings banks, the payment 
of farm mortgages, better commercial conditions, and increased 
general prosperity. 

Our present crop of beet sugar constitutes 15 per cent of the entire 
annual consumption in the United States. It is customary to 
reserve a small amount of beet sugar for local markets and supply 
these markets nearly the entire year. The great bulk of the crop is, 
however, marketed during five months of the year. As beet sugar 
constitutes 15 per cent of our entire annual consumption, it therefore 
amounts to 36 per cent of the entire consumption for five months. 
Owing to freight conditions beet sugar is not marketed extensively 
east of Buffalo and Pittsburgh, south of the Ohio River, or south¬ 
west of Arkansas and Oklahoma. Tn other words, it reaches only 
about one-half of our people during five months of the year. In the 
territory in which it cloes enter, it therefore constitutes about 70 per 
cent of the consumption during the period of active marketing. Such 
a large proportion of beet sugar largely fixes the price for other sugars, 
and as the eastern refiners can not maintain different basing price for 
different sections of the United States, it becomes a predominant 
influence *in determining the price of sugar throughout the entire 
United States during the five active months in which it is sold. 

The markets in which beet sugar is sold are constantly broadening 
as the quantity produced increases. Each year it makes further and 
further inroads on the markets heretofore exclusively supplied by 
eastern refiners. 

On pages 704 and 705 of the hearings the president of the company 
gives the distribution of the output of the Michigan Sugar Co. for the 
past five years as follows: 


States. 

1906-7 

1907-8 

1908-9 

1909-10 

1910-11 

Illinois.- ... 

Pounds. 
15,893,042 
2,590,705 
3,357,359 
35,053 
67,924 
18,388,579 
8,572,893 
1,297,516 
707,436 
1,026,056 
7,901,539 
1,723,251 

Pounds. 

7,924,294 

709,863 

5,330,310 

1,860,909 

Pounds. 

11,239,340 

1,043,141 

4,326,595 

1,102,316 

Pounds. 
12,540,100 
1,214,492 
6,907,666 
2,489,080 
37,660 
23,211,393 
4,552,871 
1,598,742 
180,000 
4,034,643 
29,344,522 
9,046,739 

Pounds. 

19,900,490 

3,381,374 

6,007,949 

4,678,524 

Iowa. 

Indiana..... 

Kentucky. 

Maryland . 

Michigan. ... 

17,861,228 
4,730,839 
2,218,516 
202,567 
2,501,582 
16,919,105 
7,464,412 

22,813,578 
4,170,189 
3,824,789 
92,878 
1,677,592 
17,201,379 
5,252,330 
36,517 

21,193,882 
4,253,187 
6,218,586 
128,565 
6,259,027 
31,138,800 
15,618,199 

Minnesota. 

Missouri. 

North Dakota. 

New York. 

Ohio ... 

Pennsylvania. 

South Dakota 

Tennessee. ._ _ 


35,309 


73,550 

404,234 

362,741 

3,583,958 

Virginia ... 


37,321 

223,768 

3,792,875 

73,592 

137,290 

3,698,056 

West Virginia. 

72,131 
9,946,120 

266,325 

2,742,530 

Wisconsin. 

Total. 

71,579,140 

70,767,789 

76,834,610 

99,066,846 

123,202,958 






































20 


PLACING SUGAR ON THE EREE LIST. 


On page 895 of the hearings the president of the company gives 
the distribution of the output of the Great Western Sugar Co., of 
Colorado, for the past five years, in bags of 100 pounds each, as 
follows: 


States. 

Number of bags, season of— 

1909-10 

1908-9 

1907-8 

1906-7 

1905-6 


10,200 

2,290 

18,240 

2,260 


California. 

250 

230,973 

99,891 

Colorado. 

265,295 1 
259,666 
8,611 
247,826 

286,414 

192,143 

7,200 

194,720 

196,438 
513,484 
70,486 
306,720 
4,460 
117,285 
28,120 
82,547 
190,579 
293,102 

241,179 

204,979 

12,000 

340,674 

80,830 

156,671 

3,325 

2,850 

369,890 

389,869 

Illinois. 

Indiana. 

Iowa. 

249,510 

18,150 

111,650 

Indian Territory. 

Kansas. 

277,810 

600 

14,400 

122,984 

383,468 

233,058 

3,000 

10,200 

141,310 

293,102 

Kentucky 

Michigan. 


Minnesota. 

285,000 

246,350 

300 

56,666 

Missouri. 

Montana. 

Nebraska.. 

139,908 

246,802 

46,603 

10 

15,904 
3,000 
64,300 
193,777 
43,500 
32,926 
50 

189,170 
4,245 
137,277 
11,230 

106,119 

New Mexico. 

New York. 


600 
2,150 
19,200 
39,885 
7,200 
61,310 

600 
7,100 
16,402 
123,340 
10,862 
32,580 


North Dakota. 

1,800 
21,091 
96,770 
37.885 
75,115 

36,001 

Ohio. 

Oklahoma. 

22,400 

Pe nnsvlvani a. 

South D akota. 

51,100 

Tennessee... 

Texas. 

119,280 

40,800 

80.531 
400 

52.532 
25,495 

23,071 

West Virginia. 

Wisconsin. 

43,300 

20,930 

18,729 

17,840 

21,335 

21,290 

Wyoming. 


Total. 

2,146,939 

1,808,553 

2,659,675 

2,301,976 

1,473,937 


On page 800 of the hearings, the president of the company gave 
from memory the following distribution of the output of the Utah- 
Idaho Sugar Co.: 

Last year a fraction over 20 per cent was marketed in the States 
of Utah, Idaho, Oregon, Wyoming, and Nevada; not much in 
Nevada. The balance was shipped to Nebraska and all points on 
the Missouri River from St. Paul down to Kansas City, Oklahoma, 
and probably 30 or 40 different points that way, Iowa taking the 
largest proportion. 

Later on, on the same page and on page 801, he states that he 
ships very little into Wisconsin; not much into Illinois, Indiana 
Kentucky, or Tennessee; very little east of the Missouri River, 
except in Iowa; not much east of the Mississippi River, and none to 
the Pacific coast. 

On page 2881 of the hearings, the president of the Western Sugar 
Refining Co. gives a table showing that during the past five years 
that company has distributed its output of beet and cane sugar in 
the following States: California, Oregon, Washington, Alaska, Idaho, 
Nevada Kansas, Minnesota, Missouri, Wisconsin, Iowa, Texas, 
Arizona, New Mexico, Colorado, Utah, Wyoming, Montana, North 
Dakota, South Dakota, Nebraska, Oklahoma, Arkansas, and Illinois. 

This table shows that in later years the distribution covers a wider 
field, and that the amount marketed in California has decreased. 




















































PLACING SUGAR ON THE FREE LIST. 


21 


The steadily increasing output of the above-mentioned companies 
in which the American Sugar Refining Co. has an interest, coupled 
with the increasing area of distribution in which each year they 
invade more and more the markets previously supplied exclusively 
by the Eastern refiners corroborates fully the testimony of the presi¬ 
dents of these companies, as given on pages 659, 743, 801, 825, 886, 
895, and 901, that these companies have no agreement, expressed or 
implied, with other beet-sugar companies or with the American 
Sugar Refining Co. relative to the territory in which they shall market 
their sugars. 

There was no testimony introduced tending to show that any of 
the beet-sugar companies have agreements of any sort with other 
beet-sugar companies, with the American Sugar Refining Co., or 
other refining companies, regulating or controlling the price at which, 
the places where, or the time when sugar should be sold by such beet- 
sugar companies. The testimony on the other hand plainly estab¬ 
lishes that these beet companies are managed by the local stock¬ 
holders. The officers of the Utah-Idaho Sugar Co., the Great Western 
Sugar Co., the Michigan Sugar Co., among others, testified in respect 
to this matter on pages 659, 743, 801, 825, 886, 896, and 901 of the 
hearings. 

The only contract referred to in the testimony was a contract that 
existed between the American Sugar Refining Co. and the American 
Beet Sugar Co., which contract was dated December 16, 1902, and 
terminated in 1905, as shown by the testimony of Mr.. Oxnard (hear¬ 
ings, p. 5387). The testimony shows that the American Sugar 
Refining Co. has no interest whatever in the American Beet Sugar 
Co. at the present time. 

HOW BEET SUGAR KEEPS DOWN THE PRICE OF SUGAR TO THE CONSUMER. 

All beet sugar made in the United States is granulated sugar—a 
refined product—and comes into direct competition with the output 
of the refiners. Every pound of sugar manufactured in the beet- 
sugar factories of the United States lessens by that amount the melt¬ 
ings of the refineries. The best information that can be gained at the 

E resent time is that this season’s output of domestic beet sugar will 
e 600,000 short tons. This will reduce, by that same tonnage, the 
amount of refined sugar which the refineries can sell. 

Beet sugar is invariably sold at a less price than cane sugar. The 
customary difference is 20 cents per 100, or one-fifth of a cent per 
pound. In the latter part of the winter of 1909-10, beet sugar sold 
at 40 cents per 100 pounds below the delivered price of cane sugar. 
(Hearings, p. 656.) 


22 


PLACING SUGAR ON THE FREE LIST 


During the present season this difference has been much greater as 
is shown by the following figures: 



American 

Sugar 

Refining 

Co. 

National 
Sugar Co. 

Warner. 

Federal 
Sugar Co. 

Arbuckle 

Bros. 

1911. 






Sept. 1. 

$6. 25 

$6. 35 

$6. 35 

*6.35 

$6. 35 

3. 

6. 25 

6. 35 

6.35 

6. 45 

6.50 

6. 

6. 40 

6.50 

6.50 

6.60 

6.50 

7. 

6. 50 



6.75 

6.60 

8. 

6.60 



6.75 

6.75 

9. 

6. 70 



7. 00 

7.00 

11. 

6. 75 



7. 00 

7.00 

13. 

6.75 



7. 25 

7. 25 

19. 

6.75 



7. 25 

7.50 

26. . . 

6. 75 



7. 25 

6. 75 

28. 

6. 75 

6.75 


7. 25 

6. 75 

Oct. 2. 

6. 75 

6. 75 


6. 75 

6.75 

3. 

6. 75 

6. 75 

6. 75 

6. 75 

6.75 

23. 

6. 75 

6. 75 

6. 75 

6.50 

6. 75 

24. 

6. 70 

6. 70 

6. 70 

6. 50 

6. 70 

25. 

6.70 

6. 70 

6. 70 


6. 70 

30. 

6.60 

6 60 

6.60 


6. 60 

Nov. 2. 

6. 50 

6.50 

6. 50 


6.50 

6. 

6. 40 

6.40 

6. 40 


6. 40 

9. 

6. 30 

6. 30 

6. 30 


6. 30 

13. 

6. 20 

6. 20 

6. 20 


6. 20 

20. 

6. 10 

6. 10 

6. 10 

6.10 

6. 10 


Compared with the above figures, the following is a statement of 
the actual base price per 100 pounds at which the Michigan Sugar 
Co. had invoiced this season’s output of sugar up to and including 
November 18, 1911, as shown by page 3150 of the hearings: 

New York basis. 


809.2 cars were invoiced at 
14.5 cars were invoiced at. 

1 car was invoiced at. 

0.3 car was invoiced at_ 

30 cars were invoiced at. . 
5 cars were invoiced at. . . 


$5. 55 
5. 65 

5. 75 
6.10 

6. 20 
6.40 


On page 3149 of the hearings there was introduced the following 
statement showing the prices at which 44 beet-sugar factories have 
sold this season’s output up to November 1, 1911: 


Companies. 


Great Western Sugar Co. 

Wisconsin Sugar Co. 

American Beet Sugar Co.. 

Continental Sugar Co.. 

German-American Sugar Co.. 

Owosso Sugar Co. 

Western Sugar & Land Co.... 
Sacremento Valley Sugar Co.. 

Carver County Sugar Co.. 

Charles Pope. 

Los Alamitos Sugar Co.. 

Southern California Sugar Co. 
National Sugar Refining Co... 
Holland-St. Louis Sugar Co... 

Iowa Sugar Co.. 

Michigan Sugar Co.. 

Total (16companies)... 


Facto¬ 

ries. 

Average 
net whole¬ 
sale price. 

11 

85. 327 

3 

5.55 

6 

5. 20 

3 

5. 55 

2 

5.50 

2 

5. 55 

I 

5. 45 

i 

4.80 

i 

5.637 

i 

5. 70 

i 

4.85 

i 

5. 40 

i 

5.60 

2 

5.635 

i 

5. 73 

6 

5. 554 

43 



























































































PLACING SUGAR ON THE FREE LIST. 


23 


This corroborates the testimony of officers of the various sugar 
companies examined, that there is no agreement as to price with the 
American Sugar Refining Co., other refiners, or between beet-sugar 
companies (p. 21). 

The entire Cuban crop was bought at low figures early in the season 
by eastern refiners, and they were in position to advance their price 
on refined sugar on the strength of European quotations, thus making 
an abnormal profit. Under such conditions, some refiners advanced 
their price from 5 cents per pound the 1st of July, 1911, to 6} cents 
per pound in September-October, while others advanced their price 
to 7J and even 7$ cents per pound. Beet sugar having been sold 
for October-November delivery at $5.55 per 100 pounds, the eastern 
refiners were forced not only' to stop their advances, but to lower 
their prices. When their cheap Cuban sugar had been exhausted, 
they bought Louisiana raws (domestic sugar) at a price which would 
enable them to compete with the $5.55 price of beet sugar. Operating 
thus, they cut their price on refined sugar to $5.75 per 100, bringing 
their price to the customary 20 points above beet. No better 
illustration can be given showing the advantage of the domestic crop 
in checking the grasping tendency of the refiners, and forcing them 
to meet competition of beet sugar. If there had been no domestic 
crop, the eastern refiners could have continued marking up their 
sugar until the new Cuban sugars came on the market early in January. 
It is quite probable that under such circumstances the consumers in 
the Umted States would have paid at least 12 cents, per pound for 
their sugar last fall. 


24 


PLACING SUGAR ON THE FREE LIST. 


'ts 

'i 

© 


© 


I'S 


o 

*•© 

<3 

•*o 

C 

S 

j-T 

© 

I* 

CO 


42 

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San Francisco: 


PLACING SUGAR ON THE FREE LIST. 


25 


J. .. 

































































2 6 


PLACING SUGAR ON THE FREE LIST. 


The above table of prices discloses the average, price paid by the 
refiners for raw sugar during the months of July, August, September, 
and October, 1911, to be as follows: 


Per 100 
pounds. 

July. $2. 44 

August. 2. 56 

September. 2. 74 

October.- * -. 2. 59 


To this must be added the duty—and as the major portion of the 
above imports came from Cuba, the highest cost for raws, duty paid 
at the refineries, adding Cuban duty, was during the month of Septem¬ 
ber, which was as follows: 

Per 100 
pounds. 


Price for raw sugar. $2. 74 

Cuban duty..... 1. 348 


4. 088. 

Add to this 1 cent per pound for the refining cost and profit gives a 
total of $5,088 per 100 pounds. At the same time, however, this 
sugar sold, f. o. b. New York, as high was $7.50 per 100 pounds. 

It is quite natural, under circumstances as above outlined, that 
refiners look with disfavor upon the enlargement of the domestic 
beet sugar industry. Some refiners who have appeared before the 
committee advocate a reduction in the duty on sugar; others are in 
favor of placing sugar on the free list. The animus behind such 
agitation is very apparent to your committee. Realizing the fierce 
competition between domestic beet sugar and the refining industry, 
some refiners wish to stop the growth of the domestic industry, 
knowing that if it is thus stopped, it will ultimately die out. Others 
desire to kill it immediately, and thus secure to themselves the 
complete control of the entire sugar market of the United States, 
whicn is the greatest sugar market in the world, consuming 20 per 
cent of the entire world’s production of sugar. 

THE REFINING INDUSTRY DOES NOT CONTROL THE DOMESTIC BEET 

SUGAR. 

The testimony discloses that the American Sugar Refining Co. 
is a stockholder in certain of the beet-sugar companies, but it is a 
holder of the majority, of stock in only one company, and that "a 
very small producer; in fact, one of the smallest producers in the 
United States. The testimony previously cited of various witnesses 
appearing before the committee establishes that the policy of these 
beet-sugar companies is controlled by the local management, which in 
turn represents local investors. 

The testimony also discloses the fact that the American Sugar 
Refining Co. has not been able.to dominate the beet-sugar business, 
and for that reason, perhaps, is gradually disposing of its stock in 
those companies. It is natural that this company should dispose 
of its stock, and it is probably essential because the growth of the 
business is so great that the beet-sugar companies are looming up 
as vital competitors, which in the future will curtail or dispose of the 
operations of the American Sugar Refining Co. as a refiner. Mr. 









PLACING STJGAK ON THE FREE LIST. 


27 


Atkins, the present vice president of the American Sugar Refining 
Co., testified on page 173 that he was in favor of lower duty, and 
was also in favor of selling their beet-sugar holdings. The Govern¬ 
ment, through its Attorney General, has mready filed a petition in the 
United States Court for the Southern District of New York asking 
for a dissolution of the American Sugar Refining Co., and especially 
seeking to sever the connection of the American Sugar Re finin g Co. 
from the beet-sugar industry. If it is illegal for the American Sugar 
Refining Co. to hold these stocks that fact will be ascertained in this 
litigation, and the final order in the dissolution case will compel the 
complete severance of all connection between the refining industry 
and the domestic sugar beet industry. 

This litigation will also disclose whether or not there are illegal 
trade contracts existing between the American Sugar Refining Co. 
and any companies in which it is interested. If such contracts are 
found to exist, the court will enjoin the parties from any further 
operations thereunder. 

The Sherman law was designed to enforce competition between 
naturally competing corporations, and the Government has already 
instituted various proceedings to enforce this law, including, as above 
stated, the filing of a petition against the American Sugar Refining 
Co. and others. 

The beet-sugar industry and the domestic cane industry have 
become formidable factors in the sugar business of the United States 
and the consumer will be better benefited by keeping alive these 
domestic sugar industries and the competition therefrom, than by 
destroying them and giving to a few refiners a monopoly of the manu¬ 
facture and sale of the sugar consumed in the United States. 

In the course of its investigation the Hardwick committee discov¬ 
ered the only source of agitation for reduction in the sugar tariff or free 
sugar. It appears that the so-called committee of wholesale grocers 
that has been flooding the country and Congress with free-trade litera¬ 
ture and memorials is a purely fictitious organization without any bona 
fide members; that this committee has never had a meeting; that it 
has no dues; that all the literature and memorials it has distributed 
have been prepared and distributed by Mr. Frank C. Lowry, sales 
agent of the Federal Sugar Refining Co., and that the entire expense 
connected with this propaganda has been borne by the Federal Sugar 
Refining Co., of which Mr. Claus A. Spreckels is president. Probably 
no better illustration has ever been discovered of a purely manufac¬ 
tured agitation for selfish and unpatriotic motives. Messrs. Spreckels 
and Lowry would kill off the beet-sugar industry in order to destroy 
their most active competitors. We are unable to understand how 
reputable wholesale grocers would lend their names to such a method 
of procedure. 

The attitude of Mr. Lowry of the Federal Sugar RefiningCo.is typical 
of the attitude of all refiners, as shown by the testimony of Messrs. 
Lowry, of the Federal Sugar RefiningCo.; Arbuckle, of Arbuckle Bros.; 
Atkins, of the American Sugar Refining Co.; and Post, of the 
National Sugar Refining Co. What is good for Mr. Lowry and the 
Federal Sugar Refining Co. is better for the so-called trust, the Amer¬ 
ican Sugar Refining Co., because it is engaged in a similar business on 
a much larger scale. • 


28 


PLACING SUGAR ON THE FREE LIST. 


Should the domestic sugar industry be destroyed, the ease with 
which the refining interests could control the price of sugar is evi¬ 
denced by the facts in the early fall of 1911, when the refiners arbi¬ 
trarily marked up the price of sugar until they were called to a halt 
by the appearance of the domestic sugar. 

Their policy is plainly stated by Mr. Lowry (hearings, p. 3387) 
when he says that they “have it bear all the traffic will bear.” 

This pending measure might well be entitled “An act to surrender 
revenue, destroy competition, and create monopoly.” 

Sereno E. Payne. 

John Dalzell. 

Ebenezer J. Hill. 

James C. Needham. 

Joseph W. Fordney. 

Nicholas Long worth. 


VIEWS OF MR, McCALL. 


1 also dissent from the report by the majority of the committee for 
the following reasons: 

1. It does away with $53,000,000 annual revenue upon an article 
which is a source of revenue in every civilized country, and with the 
probability that very little of the remitted duty will escape the refiner, 
the wholesaler, the jobber, and the retailer and reach the consumer of 
sugar. The revenues thus thrown away it is proposed to make good 
by a direct tax, which is probably unconstitutional and which would 
not rest upon income coming to the possessor without effort on his 
part, but which would treat the right to work and its necessity as a 
franchise, the exercise of which should be taxed. 

2. There have been no hearings held by the Committee on Ways and 
Means to ascertain the cost of production, and there has been no inves¬ 
tigation and report by the Tariff Board, whose report upon the wool 
and woolen schedule was so illuminative. The product of a great and 
growing industry, which now amounts to nearly a million tons of sugar 
annually, is put upon the free list with the danger of results likely to 
be so disastrous to the industry as to reduce greatly domestic produc¬ 
tion and thus, in the end, increase the price to the consumer. The 
majority does all this because they say: 

The refining interest is the most important connected with sugar manufacturing 
in the United States. Therefore the industrial position of refining requires primary 
consideration. 

I think the majorit}^ expresses undue solicitude for an industry 
concentrated in a few hands, and I am informed that the testimony 
taken before another committee of the House shows this solicitude to 
be unnecessary and likely to be very expensive to the country. 

Samuel W. McCall. 


O 


29 















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